The cost is not just the lawyers' time (which you may be able to get on contingency), but the administrative time: managing the lawsuit, discovery, assembling evidence, time of witnesses, and so on. Then there's the business risk: lawsuits only happen when both parties think they have a case, so by definition one of them will be disappointed.

The selling out to a bigger player does happen, although since it's a distress sale it's often for a low value.