Valuation of Financially Distressed Firms: Bialetti Industrie Case Study

The dissertation explores which are the methodologies and challenges related to the valuation of firms in financial distress, with a specific application of these methodologies to the case study of Bialetti Industrie S.p.A. In situations of financial distress, the traditional valuation techniques (Discounted Cash Flow, Adjusted Present Value and Comparable Company/Transaction Analysis) often fail to capture the complexity of this phenomenon. The focus on the thesis will be on assessing how these valuation approaches must be adjusted to accommodate for this uncertainty and volatility characterizing firms in financial distress. The study begins by establishing a theoretical framework for understanding financial distress, its causes, indicators, and potential implications for corporate strategy and stakeholder management. Then, the second chapter will focus the theoretical framework of the valuation models and their adaptation to account for financial distress. Finally, this theoretical analysis is complemented by the case study of Bialetti Industrie, an Italian manufacturing company that has experienced financial difficulties over the past ten years. Through the application of distress adjusted valuation methodologies, the study highlights the accuracy of these models by comparing the outcome of the analysis with the market share price of Bialetti at the end of 2024.