Saving a company from closure is possible in more cases than it seems — if you act before the options run out. This is a practical decision tree: from immediate actions to external capital, with real examples and no sugarcoating.
This is the hardest article to write of everything we publish at Blue Mountain. Not because of technical complexity, but because of what it means for the person reading it.
If you are searching for “how to save a company from closure,” you are probably living through one of the hardest moments of your professional life. Perhaps your personal life too — for many business owners, they are the same thing. You have built something. You have invested years, money, relationships, energy. And now it feels like it is slipping away.
The first thing I want to say is this: you are not alone, and more situations have a way out than they appear to when you are inside them.
The second: there is an enormous difference between companies that close because there was no alternative and companies that close because the alternative was not found in time. This article exists to prevent your company from being the second kind.
Before talking about solutions, the real problem must be understood. And here is the first obstacle: when a company is in crisis, it is tempting to frame the problem in whichever way is most convenient — or most catastrophic, depending on the day’s mood.
Honest diagnosis requires answering four questions rigorously:
Is the problem revenue, costs, cash flow, or structural?
A revenue problem means the company invoices less than it needs to be viable. This can stem from client loss, market contraction, more aggressive competition, or an obsolete product.
A cost problem means the company invoices enough but its expense structure — payroll, rent, materials, debt — consumes more than it generates. The problem is not the market; it is efficiency.
A cash flow problem means the company is operationally viable but has a timing mismatch between collections and payments that creates liquidity stress. The business works; the cash does not arrive when needed.
A structural problem is the most serious: the business model itself cannot generate enough value to be sustainable. This cannot be solved with more sales or fewer costs — it requires a deeper transformation.
Most companies in crisis have a combination of these problems. But identifying which is primary — which is the cause and which are symptoms — is the difference between applying the right solution and wasting time and money on solutions that do not work.
Regardless of the diagnosis, there are measures that can be taken immediately to buy time and improve the company’s position.
If cash flow is the most pressing problem, three levers act quickly:
Accelerate collections. Contact all clients with outstanding invoices and offer special terms — early payment discount, instalment plans — to accelerate cash inflow. Many clients will pay sooner if offered something in return.
Defer payments. Talk to your main suppliers. In many cases they are willing to extend terms if the alternative is their client disappearing. Also negotiate with the Spanish tax authority (AEAT) and social security — they have deferral procedures that, properly managed, can give weeks or months of additional runway.
Cut immediate costs. Identify expenditure that can be eliminated or reduced without immediate operational impact: subscriptions, auxiliary services, non-urgent maintenance, travel, entertainment. Not the solution, but it buys time.
This is the step most business owners delay out of fear, and it is a mistake. Banks prefer to know early rather than late. If your company has difficulty servicing its debt, speak with your relationship manager today — not after you have defaulted. Proactive renegotiation always has more options than reactive renegotiation.
In the middle of the crisis, it is tempting to freeze decisions, postpone investments, halt hiring. Sometimes necessary. But be careful: a company that stops operating loses clients, loses key employees, and loses the value that justified its existence. The goal of emergency measures is to buy time, not to close the business while it is still running.
If immediate measures are not enough — and in many cases they are not — the company needs external capital. The options are:
The most obvious option, and also the most difficult in a crisis situation. Banks have their own logic: they prefer to reduce risk when a company is in difficulty. If you have assets that can serve as additional collateral, or if you have a solid relationship with your bank, there may be room. But it is important to be realistic: obtaining new bank credit when a company is struggling is difficult, not impossible, but difficult.
The alternative financing market in Spain has grown significantly in recent years. Debt funds, private credit platforms, factoring and reverse factoring from specialist firms, asset-based lending. More expensive than traditional bank credit, but more accessible in situations of stress.
The risk: many of these solutions are patches that add expensive debt without resolving the underlying problem. Use them to buy time if the underlying plan is solid. Do not use them as a substitute for a plan.
This is the option least understood by business owners, and in many cases the most appropriate when the company has a viable business underneath the crisis.
A specialist investor in distressed situations — what we do at Blue Mountain — does not just bring capital. They bring operational experience, negotiating capacity with creditors, and commitment to the success of the recovery because they put their own money at risk.
Let me explain with two real examples (anonymised) from transactions we have been involved in.
Example 1: a logistics company in southern Spain, €28 million in revenue. Severe cash flow crisis triggered by the loss of a client representing 40% of revenues. The company had €8 million of bank debt, an owned warehouse in a strategic location, and 85 employees. The banks had cut credit. The owner’s only visible alternative was formal insolvency.
Our analysis: the underlying business was sound — the lost client had exited the Spanish market entirely, not switched to a competitor. The company had contracts with 12 other clients with growth prospects. The problem was financial, not operational.
The transaction: we acquired 80% of the equity at a nominal price plus assumption of part of the debt, injected €2.5 million of working capital, restructured the bank debt over three years, and launched a commercial plan to replace the lost client. Eighteen months later, the company was turning over €31 million and had returned to profitability. The owner retained 20% and participated in the value recovery.
Example 2: an industrial services company in Catalonia, €15 million in revenue. A different problem: progressive operational deterioration over three years due to cost competition from international companies. Negative margins. Accumulated debt with suppliers and the tax authority. The owner had attempted several financial restructurings that bought time but had not resolved the underlying problem.
Our analysis: the business had a genuine differentiating asset — proprietary technology for the maintenance of specific industrial installations that low-cost competitors could not replicate. The problem was that this advantage was not being exploited, and the company was still competing on price in segments where it could not win.
The transaction: here we acquired 100% because the owner wanted to exit. We restructured the liabilities, reorganised the management team, exited the low-margin segments, and concentrated resources on the clients who valued the differential technology. The first year was hard. In the second, the company achieved positive EBITDA for the first time in four years.
These examples are not guarantees. Every situation is different. But they illustrate that some companies that appear from the inside to have no way out do, in fact, have a genuine second chance — with the right perspective and the right capital.
Summarising the above into a practical framework:
Does the business generate genuine demand?
Is the problem primarily cash flow?
Is the problem financial (excess debt) or operational (margins)?
Do you have the resources — time, energy, capacity — to manage the recovery yourself?
Are you willing to cede control in exchange for saving the business?
There are situations where, after honest analysis, the conclusion is that the business is not viable. The market has gone, competition has won definitively, costs cannot be reduced enough to reach break-even.
In those cases, an orderly wind-down — a controlled process of asset liquidation, creditor payment to the extent possible, and orderly exit of employees with their rights recognised — is more responsible than keeping the company running while consuming the owner’s personal resources and the credit of suppliers who will also not be paid.
This decision is painful. But taking it while there are still assets to sell and the possibility of paying some of the debts is more dignified and responsible than waiting for total collapse.
If you have read this far, there is one thing I want you to take away: the factor that most distinguishes companies that recover from those that do not is the moment when the decision to act is taken.
Not plan quality, not sector, not size. The moment.
Companies that seek help when they still have options — when EBITDA is deteriorated but not catastrophic, when cash is tight but not broken, when key employees are still with the company — have infinitely more possibilities than those that wait for complete exhaustion.
And I know what you might be thinking: “Maybe the next quarter will improve on its own.” Sometimes it does. But waiting for it to improve on its own, when all the indicators say there is no reason for it to improve, is not optimism. It is avoiding a hard conversation.
We have had that conversation with many business owners. It is always hard. It is always worth it.
Talk to us. No obligation, complete confidentiality. If we can help, we will tell you. If we cannot, we will tell you that too.
Further reading: restructure or sell — when each option is right, what to expect from a distressed investor, early warning signs in a struggling company, the cost of doing nothing, investment in distressed companies, and restructuring.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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