Restructuring as a Service – RaaS

RaaS is an alternative model for dealing with distressed assets, i.e., assets that are in financial difficulty or at risk of significant loss in value. Typically, this affects companies or parts of companies, loans or securities, but also real estate. Under RaaS, such assets are specifically transferred to a service provider who holds them as a shareholder. Unlike pure lenders, RaaS service providers do not act solely as passive financiers but also take on an active restructuring role as shareholders.

RaaS thus not only enables the stabilization and reorganization of the transferred assets, but also the restructuring of the seller. The seller can legally separate itself from unprofitable areas without having to accept the disadvantages of insolvency, such as negative press, unrest in the company, or the risk of legal challenges. At the same time, there are positive effects on the balance sheet and reputation risks are reduced. The focus is therefore not only on pure “custody,” as is the case with traditional trust solutions, but on active restructuring of both the assets and the seller.

Companies are under increasing pressure for a variety of reasons, such as interest rate changes, declining sales, disruptions in supply chains, and other economic challenges. In order to become more efficient, they often sell off unprofitable or insufficiently profitable business areas or decide to streamline for strategic reasons. The initiative for this can come from various sides: from shareholders who no longer want to financially support individual areas, or from creditors who are pushing for a solution.

RaaS offers a highly flexible alternative for assets that would not fetch a significant purchase price on the market or that should not or cannot be sold to unknown third parties. Transferring them to a RaaS service provider avoids the disadvantages of insolvency without the seller having to completely relinquish their influence on the future development of the asset.

RaaS is a flexible model that combines elements from classic M&A processes and traditional trust solutions. Depending on the objectives and initial situation, the structure can be closer to a trust solution, which is creditor-driven and allows full control, or to a private equity investor model, which is more shareholder-driven, focuses on deconsolidation, and relinquishes control. This range allows RaaS to be individually tailored to the seller’s needs, as the advantages of both models can be combined.

A key feature is immediate deconsolidation in the seller’s balance sheet. This can be of considerable importance for company key figures, stock market prices, or contractual obligations to lenders (covenants).

At the same time, the transferred companies themselves also benefit. By selling to experienced RaaS service providers, they get a second chance. With a fresh perspective, restructuring measures can be taken that would often not be feasible in the original corporate context or were not implemented for reasons of time, capacity, or strategy. This makes RaaS interesting not only for large corporations, but also suitable in general for situations in which problematic assets need to be removed without internal restructuring costs. RaaS can therefore also be of interest to private equity investors who want to remove loss-making investments from fund structures or facilitate the orderly winding up of funds.

The main differences lie in control, reliability after the deal, and flexibility in future steps up to the exit. While turnaround investors primarily act in their own interests and must take into account the return expectations of their investors, a RaaS service provider focuses on the needs of the seller as a customer. This allows structural and post-closing measures to be more closely aligned with the interests of the seller, which also enables arrangements such as repurchase rights, preemptive rights, or re-participation rights.

In addition, special situations investors are generally focused on rapid value appreciation or the targeted acquisition of assets in crisis, while RaaS deliberately pursues a service-oriented perspective and does not speculate on the most lucrative exit possible. There are also clear differences in remuneration: turnaround and special situations investors regularly only achieve their returns upon exit and consistently gear their strategy towards maximizing their own profits. RaaS service providers, on the other hand, are remunerated via a service fee payable by the seller. Since the transferred assets often have only a low intrinsic value, a negative purchase price (“dowry”) is also agreed, which is primarily intended to ensure full financing and minimize the risk of insolvency immediately after the transaction. The specific amount of the fee depends on factors such as the risk profile, the scope of necessary restructuring measures after the transfer, and the expected exit scenarios, and is negotiated individually.

While traditional trust models are primarily structured toward the neutral management and safeguarding of assets or shares, usually for third parties, RaaS goes much further. The approach is more transaction- and process-oriented: it is not just a matter of “parking” or managing investments, but of achieving a deconsolidation effect, creating room for maneuver, and preparing the structure for a later transaction or realignment.

Another difference lies in the role of the provider: a RaaS service provider can accompany the operational and strategic transition phase in a spirit of partnership. This allows residual control and discretion to be maintained, while at the same time actively shaping complex special situations – including crisis or insolvency scenarios.

RaaS is a good option when a deconsolidation effect is to be achieved, but a sale on the market is not the right solution – for example, because the group continues to depend on the stability or certain services of the company concerned. In such cases, RaaS enables deconsolidation without completely relinquishing full control. In addition, RaaS can also be useful in other special situations, for example to optimize corporate structures or reorganize group responsibilities in connection with corporate agreements, such as profit transfer agreements.

Precisely because of its flexibility and high degree of discretion, RaaS is not only a temporary solution, but can also be used strategically to open up a viable solution in particularly sensitive crisis situations.

RaaS is less suitable if the asset would still generate significant proceeds if acquired on the market and the seller is indifferent as to who the buyer is and what happens to the asset afterwards. The same applies if the seller cannot or does not want to provide liquidity to finance the asset, if deconsolidation is irrelevant in creditor-driven situations, or if the transfer of the asset primarily serves to secure the creditors.

In individual cases, however, “real purchase prices” can also be presented in the RaaS approach, depending on the circumstances and the size of the respective mandate. On the other hand, RaaS can create a temporary bridge and, especially in complex situations, buy time and ensure stability, which makes it possible to target investors in the first place.

RaaS is intended as a complementary alternative but does not exclude other solutions. Depending on the initial situation, a trust arrangement may be better suited to the interests of stakeholders in such situations. MR Corporate Solutions offers a range of solutions and works with clients and their advisors to develop customized structured concepts in order to find the right solution for each challenge.

RaaS is a flexible concept that can be adapted to a variety of different constellations and needs. Feel free to contact us directly if you would like to discuss a specific constellation—anonymously, if you prefer. Or feel free to discuss the concept with your (legal, tax, or financial) advisor if you are currently dealing with issues such as liquidation, trust, insolvency, or the sale of problematic assets in your company, or if you are affected as a creditor. We would be happy to discuss possible solutions with you or your advisors without obligation.