loan-to-own strategy

The loan-to-own strategy is a financing approach where an investor provides a loan to a struggling company, often with the expectation that the company may default. If the company fails to repay the loan, the investor can take ownership of the company or its assets, typically at a significant discount. This strategy can be profitable for investors who anticipate that they can turn the company around or benefit from its assets, effectively transitioning from being a lender to an owner. It's commonly used in distressed investing and turnaround situations.