If the business can't be sold, all of those people lose their jobs.
Also, the owners presumably took a significant financial risk in starting the business, which hasn't paid off. It really baffles me when people think that employees, who aren't taking out personally-guaranteed SBA loans and risking losing it all in order to start a business, deserve all of the profit from the business. They deserve to be paid a fair wage, but people who actually take the risk to create something deserve to capture the upside.
It's unfortunate for the potential purchaser of the business.
"Unfortunately, my friend ate his entire birthday cake." It's not unfortunate that my friend ate the cake (though it probably actually is, that's not why it's used there). It's unfortunate that I don't get to have any of his cake.
For some people, building up the business is both a job and an investment. When they get old, they want the business to have enough value that they can sell it and pay for their living expenses during retirement. Or they want to be able to pass the business on to their kids so their kids are set up to make a good living.
If the business's only value is that it can provide full-time employment to someone, then it has worked out as a job but not as an investment.
There's no one right way to do it. You could instead pay yourself a salary, invest the money in other stuff (maybe through IRAs or individual 401k), and just shut down the business when you retire. And for your kids, send them to college and let them find their own careers.
It really depends on why you got into business in the first place. Maybe you just like working that way better. Or maybe you're good enough at it that you think you can get better returns by investing in your own business than you can by buying a stock market index fund.
If mom & pop doing the labor wanted to retire by selling the business, they can't. What might have been an asset isn't. So they either keep working even though they are of retirement age, or they close up shop with a smaller nest-egg.
I feel like that's simple reading comprehension. The "unfortunately" isn't like in the context of whether that fact is good or bad in general, but specifically in the context of whether or not it was a good business to buy.
What OP probably means that business was able to pay a living wage for owners and nothing more. So there was no additional cash for hiring manager, not even thinking about something for "new owner".
If you are happy to walk away and hand the "business they work at" for free to someone, flame on. Thing is, unless that is family, who would you give it to and why?
Genuinely.
It seems like the people doing the labor keeping the profits is a good outcome?