By Paul Chase | Off-Ramp Advisors LLC. Sell-side M&A for businesses in the storm, $3M–$50M revenue.
Published in: Before You File | July 7, 2026 at 8:00am
Disclaimer: This article is for informational purposes only. It does not constitute legal, financial, or tax advice and should not be relied upon as such. Every business situation is different. Consult a qualified attorney, CPA, or financial advisor before making decisions about your business. Neither Paul Chase nor Off-Ramp Advisors LLC are attorneys or financial professionals.
The most common regret in this work is waiting too long to pick up the phone.
Owners wait weeks. Some wait months. They aren’t sure a sale is even possible. They aren’t sure anyone would buy. They don’t know what the process looks like, and not knowing makes the whole thing feel worse than it is. So they sit with it, and the business gets weaker while they sit.
Let me walk you through it. This is what a sale actually looks like when a business is in trouble, from the first call to the day it closes. It runs differently from a healthy sale in ways that matter. Once an owner sees how it works, the conversation stops feeling daunting. That is usually the hardest part. Not the sale. The phone call.
Who Buys a Business in Trouble
The first thing most owners get wrong is the buyer.
They picture a predator. Someone who shows up to pay pennies for the equipment and strip the place for parts. That buyer is real. But he is not the only buyer, and he is not the one who pays the most.
The buyers who pay the most for a business in trouble are the ones who want a piece of what you built.
A strategic buyer is a company in your industry, or right next to it, that wants something specific. Your customers. Your routes. Your equipment. Your trained crew. Your contracts. They are not buying a “distressed business” in the abstract. They are buying the parts that fit inside what they already run, and they pay for what those parts are worth to them, not for how rough your situation looks. These buyers come the closest to paying full going-concern value.
An industry operator is the same idea, smaller. An owner-operator who wants to grow. A transportation company adding routes. A contractor who wants your customer base. A manufacturer who wants your machines and your people. You see these buyers all over manufacturing, distribution, construction, transportation, and business services. They are practical, they move fast, and they know exactly what they are looking at.
Private equity with a turnaround focus is the third group. These are funds that buy businesses in trouble on purpose, stabilize them, and run them under new management. They have done it before. The trouble does not scare them. They tend to move faster than a strategic buyer, and they price the risk harder.
Then there is the liquidation buyer. The asset dealer, the auction, the inventory buyer. He pays the least, usually 10 to 40 cents on the dollar for the equipment, one piece at a time. That is the last resort, not the goal.
The whole point of running a real process is to reach the first three groups before you ever get near the fourth. For most manufacturing, distribution, construction, transportation, logistics, and business services companies, those buyers are out there.
The First Call
The first call is not a decision to sell. It is a conversation about what is possible.
Here is what I need from it. A plain description of the business. Revenue and margin in rough numbers. The debt picture, meaning who holds the first lien and what kind of debt it is. And a sense of the clock. How much time do you actually have?
From that, I can give you a read. Whether a buyer pool likely exists. What kind of deal is realistic. What the debt resolution looks like. The call is confidential, it takes about thirty minutes, and it is not a pitch. It is information.
Owners almost never call too early. The ones who call too late are common. Make the call before things get worse, not after.
How the Business Gets Marketed, Quietly
Once we start, the process runs confidentially. The business is never listed anywhere. No ad, no “for sale” sign, nothing public. Your employees, your customers, and your competitors do not find out what you are doing.
My job is to figure out who in the market would want this business, then go to them. That means researching strategic buyers by industry, geography, and fit. It means knowing the PE firms and operators active in your sector. And it means building a short, targeted list of buyers who have the money, the appetite, and a reason to move on a deal like this.
Those buyers get approached directly, under confidentiality. The first approach tells them what kind of business is available, where, and at what size, without ever naming you. A buyer who wants to know more signs an NDA before he sees anything that identifies the company.
This is not me being careful for its own sake. Confidentiality is structural. The moment word gets out that a business is in trouble and on the market, the trouble speeds up. Employees start looking. Customers start hedging. The going-concern value the buyer is paying for starts to leak out the bottom. Running the process quietly is part of how I protect the value we are trying to capture for you.
What Diligence Actually Looks Like
A healthy sale involves months of due diligence. Audits, legal review, environmental work, customer calls. A sale in trouble does not work that way, and that surprises people.
The buyers here already know the business is struggling. They built that into their expectations and their process. So diligence is focused and fast.
What they look at: your revenue and how good it is. Is it recurring? Is it stuck in one big customer? Is any of it under contract? Your key people, and whether they stay. Your major customers, and whether they come with the deal. Your contracts, and what happens to them when ownership changes. Your equipment and its condition. And the debt, specifically what liens are on the business and whether we can clear them.
What they do not expect: a perfect audit, three years of certified financials, a polished data room that took six months to build. They expect honest information, organized, handed over quickly.
An owner who answers questions straight, produces financials in some workable form, and lets buyers see the operation in a controlled way will get through diligence fine. An owner who is disorganized, hard to reach, or cagey will lose buyers along the way. That part is in your control.
What the Offers Look Like
Almost every deal like this is structured as an asset purchase, not a sale of the company itself.
In an asset purchase, the buyer takes specific things. The equipment, the customer contracts, the intellectual property, the inventory, the trade name. He takes on specific liabilities, and only those. He does not take the company entity or the pile of debt attached to it. Your entity stays behind and uses the sale proceeds to settle what is left.
That structure matters. It lets the buyer pick up the working business cleanly while the debt gets handled by the deal itself. The money at closing goes to creditors in priority order. Senior secured lenders first, then the claims behind them, then unsecured creditors, and whatever is left goes to you.
Earnouts, where part of the price depends on how the business does later, are rare here. The buyer is already taking on a troubled business and discounting the price for the risk. Asking him to also pay more down the road, on a business whose current shape is the whole reason for the discount, is a structure most buyers will not accept.
The price reflects the trouble. As a general matter, that part is not up for debate. What is up for debate is whether the price reflects the real going-concern value of the business, which is almost always higher than what a liquidation buyer would hand you.
Closing and the Lien Waterfall
At closing, the money gets paid out in order. People call this the lien waterfall.
The first lien holder, usually the bank or the SBA, gets paid first, in full if there is enough. Then the liens behind it. Federal and state tax liens get addressed. Unsecured creditors take what is left, often at a settlement below what they are owed.
If the proceeds cover all the debt, you get the equity, meaning whatever is left after everyone else is paid. In a sale like this, that is sometimes nothing and sometimes a real number. It comes down to how much going-concern value the business held onto and what the total debt looked like going in.
If the proceeds come up short, there is a deficiency left on the senior loan. The lender can still go after a personal guarantee for that gap. But this is almost always negotiable at closing, and here is why. A lender would rather settle the deficiency than spend the time and money chasing a personal guarantee through court. A good advisor negotiates that as part of the deal, not as an afterthought. I spent twenty years on both the debtor and creditor side of distressed assets, so I know how the bank is doing that math.
How Long It Takes
A prepared sale runs 30 to 90 days from the day we start to the day it closes. The range is wide because the speed is mostly up to the seller.
What moves it: how fast you can get me basic financials. How available you are to answer buyer questions during diligence. How cooperative the senior lender is on a payoff. And whether the debt has knots in it, like several MCAs with blanket liens, or an IRS lien that has to be subordinated, that take time to work loose.
Owners who are organized, reachable, and available can close in 30 to 45 days. Owners who are slow with information or hard to reach during diligence drag it toward 90.
The thing that slows it down most is waiting too long to start. Once your key people have left and your customers have found someone else, the buyer pool that was there three months ago is smaller. The deal that could have closed in 45 days takes longer now, because buyer confidence is lower and there is more to dig through.
If you are working through something like this, I am glad to have a confidential conversation about it. Off-Ramp Advisors works only on the sell side, only with lower-middle-market businesses in the storm. I spent twenty years on both the debtor and creditor side of distressed assets, so I understand how lenders, the SBA, and the IRS actually think. That is the view I bring to your side of the table.
Related: Sell My Business Before Bankruptcy: What Actually Happens and When It’s the Right Move
Related: The Honest Checklist: What Makes a Distressed Business Sellable (And What Disqualifies It)
Sources:
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• U.S. Courts, Bankruptcies Increase 11.9 Percent (twelve months ending March 31, 2026; business filings up 11.4% to 25,960; for market context): https://www.uscourts.gov/data-news/judiciary-news/2026/04/23/bankruptcies-increase-119-percent
