Written by Erik | Haven Commerce LLC
A Decision Framework for Boards, GPs, and Founders Who Need to Stop Deferring
The worst outcome for a stuck SaaS company isn’t a wind-down. It isn’t a sale at a discount. It isn’t even an acqui-hire that produces minimal recovery for investors.
The worst outcome is spending 18 months bouncing between options without committing to any of them.
Every month of ambiguity burns cash, loses people, hardens the preference stack negotiation, and shrinks the option set. A company with 9 months of runway and four viable paths today has 6 months of runway and three viable paths in 90 days if nobody makes a decision.
There are four resolution paths for a stuck SaaS company. The right one depends on what the business actually has — and what it doesn’t. This guide walks through each path, the criteria for choosing, and the structure that makes execution possible regardless of which path you’re on.
What it is: The core product has real customers, real retention, and real value — but it’s buried under a cost structure sized for 3x this revenue, a product roadmap chasing 5 different segments, and a cap table that makes the equity worthless. The fix is operational and structural: cut non-essential costs aggressively, rationalize the product to the 20% that drives 80% of retention, reset incentives with a management carve-out, and optionally recap the preference stack. The company comes out smaller, profitable, and either self-sustaining or genuinely attractive to new capital.
What it produces: A company that can operate indefinitely on its own cash flow, or one that can raise a new round at realistic terms. Timeline: 90 to 180 days. Cost cuts are typically 30% to 50% of current burn.
The risk: The board commits to a reset but doesn’t execute the cost structure changes in Month 1. Every week of delay on the cuts costs runway and signals to the team that the plan isn’t real. The reset only works if the cuts are fast and credible.
What it is: The product, customer base, or technology has strategic value to an acquirer even if the standalone economics don’t justify the current preference stack. You run a targeted M&A process, negotiate preference treatment with existing investors (usually a haircut in exchange for a cleaner transaction), and close a deal.
What it produces: Recovery for investors at some level, a landing spot for the team (in most strategic acquisitions), and a clean exit for the founder. Transaction values at this scale often range from 2x to 5x ARR depending on strategic fit. Timeline: 3 to 5 months for a well-run process.
The risk: Blocking rights. A later-stage investor who won’t accept a haircut can prevent a transaction that everyone else supports. The cap table negotiation is parallel to the buyer process — you need both working simultaneously. This is why the sale path often requires an advisor who can run the preference negotiation and the M&A process at the same time.
What it is: The team is worth more than the product. A larger company wants 5 to 10 specific engineers, product managers, or domain experts, and is willing to pay a premium over individual recruiting costs to get them as a cohesive group. The deal structure typically includes retention packages for key employees, some recovery for investors, and a mechanism to wind down the remaining entity.
What it produces: Retention packages and landing spots for key employees (the primary beneficiaries). Some recovery for investors, typically less than a sale. A relatively fast, clean exit for the entity — often 60 to 90 days from term sheet to close. The founder’s outcome varies significantly based on their role in the team value and how the deal is structured.
The risk: The acquiring company’s needs change mid-process, or the team fractures when the deal becomes real. Acqui-hires have a higher fall-through rate than asset sales because the “asset” is human and can walk away.
What it is: The business doesn’t have enough product value, customer value, or team value to justify any of the first three paths. The right move is an orderly process that maximizes recovery for stakeholders, handles AP obligations responsibly, resolves personal guarantees, notifies customers appropriately, and preserves the founder’s reputation and ability to start something new.
An assignment for the benefit of creditors (ABC) is typically the vehicle. An assignee — a neutral third party — takes control of the company’s assets, liquidates them, and distributes proceeds to creditors in priority order. The ABC is faster and cheaper than a Chapter 11 bankruptcy and is the standard mechanism for startup wind-downs in most U.S. states.
What it produces: Recovery of residual assets (IP, customer lists, hardware, prepaid contracts), discharge of most company-level liabilities, resolution of personal guarantees through negotiation, and a process that customers and vendors can understand. A well-executed wind-down typically recovers 20% to 40% more than an unmanaged dissolution, because assets are marketed, contracts are transitioned, and IP is sold rather than abandoned. Timeline: 60 to 90 days.
The risk: Waiting too long. An ABC requires at minimum $50K to $100K in fees and working capital. If the company burns below that threshold before the process starts, the orderly wind-down becomes a disorderly one. The clock on this path starts the day the board decides — not the day cash runs out.
The decision between paths isn’t primarily about preference or optimism. It’s about what the business actually has when you look at it honestly.
I’ve built a simple set of diagnostic questions that point to the right path in most situations:
On the product: Is net revenue retention above 90%? Do customers use the product at least weekly? Has there been any inbound acquisition interest in the past 12 months?
On the cap table: Is any blocking holder reachable on a preference haircut? What does their recovery look like in a wind-down vs. a negotiated deal? Have they engaged constructively in recent board conversations?
On the team: Are the 3 to 5 most critical people still here and still engaged? Would they follow a new structure — a management carve-out, a restructured company, or a team acquisition at a larger firm?
On cash: What’s the real runway — not the headline number but the adjusted figure that accounts for accrued liabilities, at-risk revenue, and the cost of executing whatever path you choose? How much runway does each path consume before it produces recovery?
The answers almost always point clearly to one path. The problem is that most boards arrive at these questions without reliable data. The founder’s numbers are optimistic. The VC’s numbers are based on board materials produced by the founder. Nobody has an independent picture of reality.
That’s why every path starts with the same first step: an independent diagnostic that produces a reliable Situation Assessment. Two to three weeks of focused work that produces real cash positions, a true liability inventory, an asset catalog, and modeled recovery under each path.
You can’t pick a path you can’t see clearly.
Regardless of which path the board chooses, the execution follows a consistent structure.
Days 1 to 30: Map everything. Cash position and true burn trajectory. ARR by cohort (where’s the retention, where’s the churn). Cost structure line by line with a simple test: essential to the core product or not. Complete cap table and governance map — who holds blocking rights, who signed personal guarantees, what the board composition is. AP/AR aging. Every vendor contract with auto-renewal dates. Key employment agreements.
The output is a single Situation Assessment document: 5 to 7 pages with the financial reality, the stakeholder map, and 2 to 3 viable paths with real numbers. Most boards have never seen this level of clarity on a stuck company.
Days 31 to 60: Execute. For a strategic reset: cut non-essential costs immediately, rationalize the product, and reset incentives. For a sale or acqui-hire: build the target list, prepare materials, and start outreach. For a wind-down: engage the assignee, notify creditors, and begin the ABC process. This is where most stuck companies stall — they had the analysis, but nobody had the mandate to move from analysis to action. The 90-day structure forces that transition at Day 31.
Days 61 to 90: Decision and commitment. The board receives a clear recommendation with modeled outcomes, preliminary indications of interest if applicable, and a specific timeline for execution. The board votes. The company has a path.
The diagnostic (Days 1 to 30) can be done as a standalone engagement without committing to the full 90 days. Sometimes the Situation Assessment is all a board needs to act on its own. Sometimes it leads to a longer engagement. Either way, the board gets clarity it didn’t have before — and clarity is what converts stuck situations into resolved ones.
If you’re a board or founder trying to figure out which path applies to your situation, let’s talk. . I’ll walk through the decision criteria with you and help you see which path the data points to
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