Stop Chasing Acquisitions. Fix the Structure First.

For most of the last cycle, success was about buying well.
In this part of the cycle, survival and upside are about structuring well.

Many owners are holding assets that look acceptable on paper but feel increasingly uncomfortable in practice. Equity is trapped. Liquidity is thin. Operating performance has not recovered as expected. And the market is no longer forgiving weak capital structures, even when the underlying asset is solid.

Waiting for the market to bail you out is no longer a strategy.
It is a bet that time will fix a structural problem.

This issue is written for operators, owners, and investors who are realizing that the next phase is not about chasing acquisitions. It is about fixing capital stacks, restoring flexibility, and creating liquidity in the short term while preserving upside.

The opportunity is real.
But it belongs to those who can restructure reality, not those who are hoping it reverts.

The Problem Isn’t the Asset. It’s the Structure.

Across the market, I am spending less time reviewing assets for sale and more time reviewing existing capital structures.

That shift is intentional.

Many deals purchased between 2021 and 2024 were not “bad deals.” They were acquired at too high a basis and paired with capital structures that assumed margin expansion, cheap refinancings, or rapid operational recovery.

Instead, owners experienced:

• Margin erosion
• Higher fixed costs
• Slower demand recovery
• Capital structures that removed flexibility precisely when it was needed

The result is trapped equity.

Not because value disappeared entirely, but because the structure no longer allows owners to access it without taking unacceptable risk.

A Real Example: When the Business Plan Worked, but Liquidity Didn’t

In 2025, I met with owners of a multi-use property that was genuinely compelling.

The asset was well located.
The operations were stable.
The long-term fundamentals were strong.

On paper, the discussions were exciting:

• Land use analysis
• Redevelopment potential
• Built-to-suit opportunities
• Repositioning strategies
• Long-term value creation

But every conversation eventually returned to the same issue.

Liquidity.

The question was not whether the business plan worked.
It did.

The question was determining which types of investors would be interested and creating a structure that would motivate them to issue term sheets.

The asset did not need a new vision.
It needed a capital structure that reflected today’s reality.

The Shift in How I Underwrite Opportunities

In this market, I care less about assets changing hands and more about how existing assets are financed and capitalized.

Specifically, I am asking:

• Where is flexibility constrained?
• What assumptions are embedded in the debt?
• What happens if performance stays flat longer than expected?
• Who is bearing risk, and who has optionality?

In many cases, the solution is not a sale.
It is a restructuring.

What was required in this case was an equity stack structure that:

• Provided liquidity to the owner in the short term
• Reduced the risk of forced outcomes
• Preserved meaningful upside for the future
• Aligned incentives across all capital participants

Once the structure was addressed, the opportunity became financeable.

Not because the asset changed, but because the risk profile did.

Why Structure Comes Before Strategy in This Market

In this phase of the cycle, strategy without structure is fragile.

Owners are not failing because they lack vision.
They are constrained because their capital stacks removed flexibility at the wrong time.

Liquidity events today are not about maximizing price.
They are about creating room to operate.

The operators who win in this market will not be the ones who chase the cleanest acquisitions.
They will be the ones who can:

• Stabilize capital structures before performance recovers
• Introduce new capital without wiping out existing equity
• Rebalance risk without forcing premature exits

This is where experience matters.
Not in underwriting upside, but in managing constraint.

What’s Actually Mispriced Right Now

What I’m seeing mispriced right now isn’t risk in the abstract.
It’s time.

When equity is trapped, owners feel pressure to act, but the asset itself often isn’t broken.
What’s broken is the structure around it.

That creates a dangerous gap.

Too much pressure leads to forced outcomes.
Too much patience without liquidity leads to erosion.

The work isn’t guessing where prices go next.
It’s building structures that buy time without destroying upside.

When you solve for liquidity first, optionality shows up.
When you solve for optionality, outcomes improve without needing heroic assumptions.

That’s not financial engineering.
It’s disciplined operating logic applied to capital.

Closing

This cycle isn’t rewarding activity.
It’s rewarding restraint and structure.

The best outcomes I’m seeing aren’t coming from rushing into new acquisitions or waiting for markets to bail anyone out.
They’re coming from situations where capital structures are redesigned to reflect today’s reality while keeping tomorrow intact.

Whether that leads to a sale, a recap, or a longer hold depends on the asset and the people involved.
The point is having the ability to choose.

That ability doesn’t come from optimism.
It comes from structure.

And in markets like this, structure is what separates pressure from opportunity.

See you next week.

Damon

P.S. Wishing you a strong start to the new year. I appreciate you reading and thinking through these issues with me as the market evolves. If you're interested in how I can help you with structure or grow your portfolio Schedule a Call.