How to Sell a Failing Business

Yes, it is possible to sell a failing business, though doing so successfully requires complete transparency regarding finances and a thorough understanding of valuation methods for distressed enterprises.

Understanding why your business is not profitable can also help attract buyers. Careful examination could reveal simple solutions that could quickly reverse course.

Determine the Value of Your Assets

An initial step to selling your company involves listing and valuating all business assets. This will enable you to determine how much equity to retain when selling, as well as how dependent the business is on you as an owner; the less dependent your company is on you as its founder, the greater its worth will be to potential buyers.

As part of your asset evaluation, it’s necessary to assess all assets – both tangible and intangible, both on-balance sheet and off-balance sheet – using appropriate valuation methodologies, such as income flow method for intangible assets such as professional expertise or market value approach for tangible assets such as factory machinery.

Once you’ve compiled an exhaustive list of assets, subtract the value of liabilities to determine the net worth of your company. Be sure to include ongoing costs like utility expenses or bank debt as well as payments due from suppliers or employees as liabilities; additionally tax liabilities should also be taken into consideration; for assistance when calculating this figure it would be prudent to consult an accountant.

Identify Potential Buyers

If you want to sell a failing business, it is essential that you understand both the process involved and any special challenges you might face in doing so. Be honest when communicating with potential buyers regarding its state as well as any assets which could make it profitable again in future. In addition, be wary of the specific tax implications and legal liabilities involved with selling such an enterprise.

Before initiating the sales process for your failing business, a full assessment should take place. A close look at finances, operations and customers may reveal reasons for its unprofitability, such as lack of investment capital or competition within your market space as well as management challenges.

Identification of key factors that will attract potential buyers can help you decide how much you should ask for your business. For instance, a music chain once popular with high street shoppers may attract a buyer with retail experience and an affinity for vinyl records.

As with any sale, patience will be key when trying to locate a buyer for your business. Your pool of prospective buyers may be smaller compared to when selling an established enterprise and the due diligence process may take more time; nevertheless, don’t be tempted by lowball offers or aggressive negotiations; be patient.

Prepare a Comprehensive Sales Package

Selling a business is never an easy decision to make, especially when the enterprise has been failing for some time. However, sometimes selling is the better solution than continuing to waste funds on unprofitable ventures.

One key consideration in selling your business should be understanding why its losses have occurred, as this can help create a sale that is more appealing and transparent to potential buyers, while providing useful data that bolster your valuation and asset-based approach.

Importantly, it is also crucial to recognize that selling a failing business has its own set of unique tax and legal repercussions that must be carefully navigated by qualified professionals.

Selling a failing business can be daunting, yet still be an attractive option for entrepreneurs. By taking the necessary steps and working with an experienced professional, you may be able to sell it at a substantial profit and move onto the next chapter of your career. Being prepared, knowing its worth and being open-minded when negotiating are all essential for a successful sale of any failing business. If all other strategies and professional help have failed, don’t let failure erode your confidence – instead find something else passionate enough that is your focus of interest if necessary.


Accepting that your business is failing can be hard. After investing time and resources into it, watching its decline can be heartbreaking. Unfortunately, saving every failing company may not always be possible and selling may be your best option.

Step one in selling a failing business is identifying its causes of failure. For instance, if money is being lost due to ineffective marketing or staffing efforts, finding solutions for change should be top of mind in order to attract a potential buyer who could turn things around and generate profit could help get your sale underway.

Transparency with potential buyers regarding your business’s finances is also crucial for successful sale negotiations. By being forthcoming with information, it will help build trust between them and you – leading to an easier sale experience overall. Present the benefits of your business such as its location, assets or brand recognition – to encourage potential buyers to offer fair compensation prices. Before offering up your company for sale it would also be wise to seek professional advice from an experienced business broker or lawyer.