Arbitrage and Workout Situations

“Arbitrage and workout investing involves the pursuit of profit from an announced corporate event such as the sale, merger, recapitalization, or liquidation of a company.”

“to evaluate an arbitrage or work-out situation we must answer four questions: •How likely is it that the promised event will indeed occur? •How long will our capital be tied up? •What chance is there that something still better will transpire (an example would be the emergence of a competing takeover bid) •What will happen if the event does not take place? (Examples would include antitrust action or financing glitches).”