Let’s start with the hard truth: selling an unprofitable business can be a real challenge.
And it’s usually more difficult than the owner expects.
This is probably because of stories we hear about fast-growth, VC-backed companies that get acquired for massive sums before they even turn a profit.
In reality, those deals are outliers.
Most buyers want cash flow, and they simply won’t pay much for a company that doesn’t have it.
That doesn’t mean it’s impossible to sell a business that isn’t turning a profit. But if you’re hoping to sell a business that isn’t profitable, go in with clear eyes and realistic expectations.
7 tips for selling an unprofitable business
So what can you do to turn the odds in your favor when looking to sell a business that’s not profitable?
Here are a few tips for the sale process if you’re in this boat.
1. Get clear on what you actually have to sell
Without profit, the valuation math that drives most business sales doesn’t apply. You need to shift the question from “what does this business earn?” to “what is a buyer actually paying for?”
In an unprofitable business, value usually lives in one of a few places: proprietary software or intellectual property (IP), an audience or email list, a recognized brand in a niche, a customer base, or a skilled team.
The stronger and more transferable any of these assets are, the better your chances of finding a buyer.
In most cases, a strong brand alone isn’t enough. You’ve got to be able to draw a direct line between that brand and how your buyer will use it to make money. What will enable them to turn a profit using the brand if you couldn’t?
Before you approach anyone, get honest about which of these you actually have—and which would survive the transition to new ownership.
2. Know your buyer pool (it’s smaller than you think)
Unprofitable businesses are usually purchased by one of these buyer types.
A. Strategic buyers: Competitors or adjacent companies who want what you’ve built for reasons beyond cash flow. This is the buyer type every unprofitable business is hoping for.
And sometimes they do work out! But strategic deals are more difficult to orchestrate than most founders realize. Especially if you’re holding out for an above-market rate.
B. Turnaround investors: Buyers who specialize in underperforming businesses and believe they can fix them.
In addition to being hard to find, buyers like this typically want to pay low prices for what they consider distressed assets, so go into these conversations with realistic expectations.
C. Asset buyers: Parties who want specific pieces (a domain, a customer list, a codebase) rather than the whole business. Again, they’ll probably be looking for a great price since they don’t want the entire business.
Each of these buyers has different motivations and will value your business differently. Knowing which type you’re pitching shapes everything about how you position the sale.
3. Consider selling assets rather than the whole business
If you can’t find a buyer for the company itself, one practical path is to sell part or parts of the business. Instead of selling the entity, you sell individual components—the domain, the email list, the software, the brand, the customer contracts—sometimes to different buyers.
You won’t get the kind of sale multiple a profitable business commands, but you can recover something meaningful and close the chapter without simply walking away empty-handed.
Marketplaces are commonly used for this kind of sale, particularly for digital assets.
4. Don’t wait until you’re out of runway
This is where a lot of founders get tripped up. They wait too long, hoping the business will turn profitable before they try to sell—and by the time they’re ready to have the conversation, they’re running out of time and leverage.
As long as the business is operating, you have something to sell. The moment it shuts down, you’re left with assets only. And a business that’s no longer operating is a much harder sell than one that’s still running, even if it’s losing money.
If you can see the end coming, start exploring your options now—not when the bank account hits zero.
5. Set realistic price expectations
Founders who’ve spent years building something often carry a number in their head that the market won’t support. That’s understandable, but it can derail a sale before it starts.
Occasionally, a founder will assume an unprofitable business is worth nothing and doesn’t negotiate as they should. But in most cases, founders have unreasonable expectations for how much they might get for their business. They make the mistake of basing that number on how much effort they put in, rather than how valuable the company or assets will be to a buyer.
It can be really hard to get a sense for how much unprofitable companies might be worth, in part because it’s often challenging to find an advisor who will represent you.
Your best bet for negotiation might be getting creative with the deal structure, like being open to an earn-out or employment agreement.
6. Be honest in your marketing materials
Buyers will find the problems eventually. Trying to obscure unprofitability—through selective presentation of financials, add-backs that don’t hold up, or vague language about “growth potential”—will either kill the deal in due diligence or create legal exposure after the sale.
Your best bet is to be transparent about the challenges from the beginning, and show why the opportunity is compelling.
Lead with what’s real: here’s what the business is, here’s why it hasn’t been profitable, and here’s what a buyer could do differently. That framing respects the buyer’s intelligence and tends to attract the right kind of interest.
7. Understand the impact of raising money
If you raised venture capital, you might have a network of supporters who can help you navigate selling an unprofitable business. One aligned connection or introduction is sometimes all it takes.
But there’s a downside to having raised money, too: your investors are likely hoping to get their money back. This can be a red flag for advisors, because they know you might not be able to take a deal you’re keen on if your investors aren’t happy with it, which lowers the probability that a deal will get done at all.
Some founders say they want to sell for a certain amount so they can “make their investors whole,” but that price isn’t based on value to the buyer, which means it’s often unrealistic.
Even if you raised money, the same rules of selling apply to you. Buyers are still looking for cash flow, and they’ll still value your company in the same way, regardless of how much you want or have to pay back to investors.
The bottom line about selling an unprofitable company
Unprofitable businesses do sell. But founders who go in expecting the process to look like a standard acquisition are usually disappointed. The buyer pool is smaller, valuations are lower, and the conversations are sometimes harder.
The best thing you can do is start early, be honest, and get clear on what you actually have to offer.
If you’re not sure where to begin, talking to an M&A advisor who has seen situations like yours is a good first step.
While most of the brokers and advisors in our network only represent profitable companies, we know a few who will work with unprofitable businesses. Get in touch to request your match.
