Can I back out of a distressed-business purchase if I find new problems after signing but before it closes?

It depends entirely on what your purchase agreement actually says, and this is where distressed purchases differ most from an ordinary business sale. Because these deals are often structured "as-is, where-is" with minimal representations and warranties, a buyer generally can't walk away simply by pointing to a newly discovered problem the way they might argue a representation was breached in an ordinary purchase — there's often little or nothing being represented to breach.

Your ability to back out instead usually depends on the specific closing conditions you negotiated into the agreement before signing — a financing condition, a due-diligence or satisfactory-review condition, or a material-adverse-change clause, for example. If one of those conditions genuinely isn't met, you may have a basis to walk away or renegotiate; if none applies, a newly discovered problem alone may not be enough. Because there's less built-in protection than in an ordinary sale, doing thorough due diligence and negotiating strong conditions before signing matters even more in a distressed purchase than in a typical one.