30 days of cash left.
Thatโs when most founders finally pick up the phone.
By then, the options are gone.
In this episode of This Is M&A, Phil Cassel, Managing Director at Cassel Salpeter & Co., lays it out plainly: distress doesnโt kill companiesโwaiting does. The difference between a controlled outcome and a fire sale often comes down to one thing:
How early you act.
Phil has seen both sidesโinside companies trying to survive and running sale processes under pressure. His message is consistent across every situation:
Time never adds value to a deal. It kills them.
The 30-Day Problem
When a company shows up with 30 days of cash, itโs not a processโitโs a scramble.
Buyers know it. Advisors know it. Suppliers feel it. Employees sense it.
At that point:
- Youโre negotiating from weakness
- Youโre reacting instead of driving
- Youโre out of time to fix anything meaningful
Compare that to a business with six months of runway:
- You can run a real process
- You can create competition
- You can stabilize operations
- You can preserve value
That gapโ30 days vs. six monthsโis often the difference between salvaging equity and losing everything.
The Early Warning Signs Most Founders Miss
Distress doesnโt show up all at once. It leaks in slowlyโthen all at once.
Phil breaks it down into four areas founders need to watch closely:
1. Customers
- Slower payments
- Reduced order sizes
- Increased churn
2. Suppliers
- Tightening terms
- Requiring prepayment
- Cutting off supply
3. Personnel
- Key employees leaving
- Declining morale
- Productivity drops
4. Cash
- Shrinking runway
- Increasing reliance on short-term fixes
- Inability to fund operations cleanly
None of these happen overnight. But most founders rationalize themโuntil itโs too late.
The Cost of Waiting
The biggest mistake in distressed M&A is simple:
Waiting too long to act.
Founders often believe:
- โWeโll turn it around next quarterโ
- โWe just need one more customerโ
- โLetโs avoid signaling distressโ
But time doesnโt fix problems in a dealโit amplifies them.
The longer you wait:
- The weaker your negotiating position becomes
- The more leverage shifts to buyers
- The more value erodes across the business
And once confidence breaksโwith lenders, suppliers, or employeesโitโs incredibly hard to recover.
The Distressed Playbook: What Actually Preserves Value
When things start to go wrong, the goal isnโt perfection.
Itโs control.
Phil outlines a practical playbook:
1. Retain Your Key People
Your team is the business.
Lose them, and:
- Operations break
- Buyers lose confidence
- Value drops immediately
Retention plans, communication, and clarity matter more than ever.
2. Stabilize Suppliers
Suppliers can quietly kill a deal.
If they:
- Tighten terms
- Stop delivering
- Lose confidence
โฆyou donโt have a business to sell.
Managing these relationships proactively is critical.
3. Protect Customer Relationships
Revenue stability is everything.
Even in distress:
- Maintain service levels
- Communicate clearly
- Avoid disruption
Buyers will forgive a lotโbut not declining revenue with no explanation.
4. Move Fast and Run a Process
Speed is not panic. Itโs strategy.
A well-run processโeven under pressureโcreates:
- Competitive tension
- Better outcomes
- More optionality
Dragging it out does the opposite.
Bankruptcy Isnโt a Dirty Word
One of the most misunderstood tools in M&A is bankruptcy.
Phil reframes it:
Bankruptcy is not failure. Itโs structure.
Used correctly, it can:
- Provide breathing room
- Pause creditor pressure
- Allow contracts to be restructured or rejected
- Enable an orderly sale process
In many cases, it actually:
- Preserves jobs
- Maximizes recovery
- Protects value
The stigma is outdated. The strategy is not.
The Role of a Quality of Earnings Report
In distressed situations, credibility is everything.
A Quality of Earnings (QoE) report does two things:
- Validates your numbers
- Speeds up diligence
And the impact is real:
- Higher close rates
- Fewer surprises
- Stronger negotiating position
Phil puts it simply:
Even a modest improvement in deal certainty pays for the cost many times over.
In a pressured process, certainty equals value.
The Through Line: These Lessons Apply to Healthy Deals
Hereโs the part most founders miss:
This isnโt just a distressed playbook.
Itโs a better way to run any deal.
- Acting early creates leverage
- Preparation builds confidence
- Speed drives outcomes
- Control increases valuation
The best operators donโt wait for distress to act like this.
They run their businessโand their deal processโas if time matters.
Because it does.
Final Thought: Always Be Deal-Ready
Distress doesnโt start when cash runs out.
It starts when you stop being proactive.
The companies that winโwhether in strength or under pressureโare the ones that:
- Move early
- Prepare thoroughly
- Control the process
Because in M&A:
Time kills deals.
Friction kills momentum.
And waiting is the most expensive decision you can make.
Watch the full episode here
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