How to Sell a Business That Isn't (Yet) Profitable

A loss-making business isn't automatically unsellable. But if you try to sell it as though it were profitable, you'll disappoint both yourself and potential buyers. The sales case needs to look different when you can't lean on a track record of profit — it needs to be about direction and credibility, not the past.

Be honest about why the numbers look the way they do

The most important task is to explain the loss credibly. There's a big difference between a loss caused by a deliberate growth investment (e.g. marketing or hiring ahead of expected growth), a one-off event (losing a single big customer, a one-time expense), or a turnaround already underway (new initiatives that haven't fully shown up in the accounts yet). A buyer who understands why can far more easily assess whether the loss is temporary or structural — and that's exactly the question a buyer asks themselves first.

Build the case on direction, not the past

Without a track record of profit to point to, the sales materials need to carry a different weight: a realistic, concrete forward-looking budget, a clear explanation of what's already been done to turn things around, and ideally early signs that it's working — rising order volume, falling costs, or other indicators that support the story. Vague promises that "it'll probably turn around" convince no one; concrete, documented signs do.

Expect the price to reflect the extra risk

A buyer will naturally price in the added uncertainty — either as a lower multiple, or by proposing a structure where part of the payment only falls due if the turnaround genuinely succeeds. An earn-out agreement is often the most realistic route to a fair price for both parties in this situation: you get the chance at the full price if the plan holds, while the buyer doesn't have to pay for a result that isn't proven yet.

Be realistic about who's actually in the market

The pool of buyers for an unprofitable business is typically narrower than for a profitable one. A passive investor looking for a stable return from day one is rarely the right audience. It's far more likely that a strategic buyer — typically another business in the same or an adjacent industry, who sees concrete synergies, economies of scale, or strategic value in taking you over — is the one who can actually see past the red numbers and assess the underlying value.

Timing matters more than usual

If the loss is temporary, it can be worth considering whether there's an advantage to waiting until the first positive signs show up in the accounts, rather than selling in the middle of the toughest period. That's not always possible — sometimes a sale is exactly the solution to a pressured situation — but if it is an option, being able to show even one quarter or year of improvement significantly strengthens your negotiating position.

Frequently asked questions

Can I sell a business with a loss at all?

Yes, but the sales case needs to be built on forward-looking direction and credibility instead of historical profit — and you need to be prepared for the price and pool of buyers looking different than they would for a profitable business.

Should I try to hide that the business has a loss?

No. A serious buyer will find it during due diligence regardless, and an honest explanation of the loss builds far more trust than an attempt to downplay it.

How do I secure a fair price if the future is uncertain?

An earn-out structure is often the most realistic solution — part of the payment is tied to the expected improvement actually happening, so both parties share the risk more evenly.

Read more about how an earn-out agreement works in practice, or about when the right time to sell actually is.