You underestimate how expensive fighting can be.

Lets say that someone comes along and accuses you of a workplace sexual misconduct situation. You own the company, so there's no risk of being fired. But there's a public reputation element that could cost you customers in the long run. You know you didn't do it, but proving that is difficult. It becomes a situation where they are accusing you, and you are denying it but neither side really has a lot of evidence one way or the other.

Public opinion would be against you, and that could have negative ramifications for your career even if the accuser eventually loses in court. Court records are public, so IF it goes to court everyone is going to know what you have been accused of.

You sit down with your lawyer. They tell you that the legal fees would likely be in the $250,000 range if it goes to court. In addition you estimate that you would lose $10,000,000 in business by customers dropping you because they don't want to be associated with someone who's accused of that.

Then, if you lose, you'd likely have to pay the accuser an additional $10,000,000. So there's no scenario where if you take this to court you don't lose at least $10,250,000 but could be as much as $20,250,000.

You offer the ex employee $1,000,000 to just drop the whole thing, and they agree.