Distressed Business Investment & Acquisition

In a perfect world, you would sell your business before it becomes insolvent. However; if you are unable to pay your bills and are taking on water, the show is not over. There are now several options t0 remove the debt from a business. At Minerva, we are one of the few investment firms that will look at investing in distressed businesses. This is the most fail safe way to get out from under the pile of debt that you are facing.

Selling a business that is in debt

At Minerva Equity, we are primarily an investment and acquisition firm for the lower mid-market. There are several caveats that come with investing into distressed businesses or businesses that are in debt. Here is a non-inclusive list of the items that we look at when determining if we will invest or not.

  • Type of debt
    • Depending on how much debt the business has, we may be able to remove it entirely, assume the debt or renegotiate the terms
    • Personal guarantees may be removed. Even SBA debt canhave the personal guarantees removed, but there is a process for doing so.
  • Size of business
    • We are not interested in local “mom & pop” type businesses. They simply aren’t large enough to move the needle for us.
  • Industry
    • Each industry has different traits, some are easier and some are more difficult than others to remove debt from and therefor invest into.

Getting investment into a business that is distressed or in debt

If your business has substantial revenues, but comes up short at the end of the month, you may be a good fit to have your business debt restructured in order to start making a substantial profit.

  • Type of debt
    • Depending on how much debt the business has, we may be able to remove it entirely, assume the debt or renegotiate the terms. We put together an article on restructuring and removing small-mid sized business debt that explains how multiple lenders treat restructuring.
    • Personal guarantees may be removed. Even SBA debt canhave the personal guarantees removed, but there is a process for doing so.
  • Size of business
    • The business needs to make a profit of $1M or more (excluding debt) for us to be interested. If the business is smaller than this, we wil refer you to another investment company or debt consolidator.
  • Industry
    • Each industry has different traits, some are easier and some are more difficult than others to invest into and return cash more quickly
 
Another option for getting business financing is looking at the Small Business Administration (SBA). If you have already used an SBA loan and are looking to get out from under it, have a look at our article on restructuring SBA debt.