Can You Sell an Unprofitable Company? (How to Avoid a Distressed Exit)
Can I Sell My Business If It’s Not Profitable?
We speak to stressed out entrepreneurs everyday, and what we've discovered is shocking: a majority of business owners leave 25% or more of their company's value on the table when they sell.
Unfortunately, a lot of conversations go like this:
"What if I've waited too long? Can I still sell my business if the numbers aren't where they used to be?"
Maybe your revenue has slipped the past few years.
Maybe your team is tired. Maybe you are tired.
You're not alone and the answer is yes: you can sell an unprofitable business.
But here's the hard truth: you'll either need to roll up your sleeves and fix what's broken, or watch your valuation get slashed dramatically.
Most founders dream of a strong exit. A clean handoff. A life-changing wire transfer that validates years of sacrifice.
But when your business is losing money, the dynamic completely shifts. Remember, "the best companies are bought, not sold." When you're unprofitable, you lose control of the conversation. Suddenly, buyers dictate terms, you're negotiating from a position of weakness, entertaining lowball offers, or watching potential acquirers circle like vultures waiting for distress.
Not preparing to sell is a gamble you simply can't afford to take.
Here's the truth that most advisors won't say out loud:
Most "unsellable" companies? They're not broken, they're unprepared.
The good news? ****Margins can be fixed and there are proven systems to reduce owner dependency and make your business easier to sell.
But only before you go to market.
And that's exactly what we'll cover in this article. Plus, discover how our Exit Navigator™ system is designed to help entrepreneurs sell for 25% more value OR we pay them $6,000 (no joke).
Navigate Your Exit with Confidence 🚀
Introducing the Exit Navigator
Whether you're 12 months or 12 weeks from exit, our Exit Navigator gives you a step-by-step roadmap to prepare, position, and sell your tech company at maximum value. Built for founders in the $2M–$20M revenue range, this free download includes:
A deal-readiness checklist
Tips for reducing diligence friction
Red-flag risk items buyers spot quickly
Valuation drivers by business model
A 6-phase roadmap from prep to post-close
Make your exit a strategy—not a scramble.
Book your free assessment call HERE or download our Million Dollar Exit Guide for free below 👇
Who Actually Buys Unprofitable Businesses?
It’s a smaller buyer pool, but it exists. Buyers of distressed or unprofitable companies generally fall into one of three categories:
1. Turnaround Buyers
Seasoned operators who see opportunity where others see chaos. They’re typically looking for:
A recognizable brand or customer base
Operational inefficiencies they can fix
A major discount on valuation
Expect aggressive terms and full control post-close.
2. Asset Buyers
These buyers aren’t purchasing your business—they’re purchasing what’s left of it:
Equipment, trucks, or fleet
Software/IP
Contracts or customer lists
Real estate or licenses
The business itself may be shut down or absorbed.
3. Distressed Private Equity / Special Situations Investors
These groups specialize in messy turnarounds. They may pursue companies with scale potential but usually demand:
Deep discounts
Tight deal protections
Controlling interest
How Unprofitable Businesses Are Valued
Without positive EBITDA, buyers fall back on alternative valuation methods like asset value, discounted revenue, or potential turnaround gains.
Here’s how those play out:
In other words: Buyers aren’t betting on your past, they’re betting on how quickly they can fix your future.
Want to know the Gold Standards buyers are looking for? Download our Business Exit Guide HERE.
Why Selling Unprepared Is Risky & How To Regain Control
When founders rush to market without preparation, they face significant challenges that can dramatically impact their exit:
🚩 Smaller Buyer Pool – Only a handful of buyers pursue troubled companies, and they know they have all the leverage in negotiations.
🚩 Steep Valuation Discounts – Your perceived business value will be slashed—sometimes by 50% or more—when buyers identify profitability issues.
🚩 Unfavorable Deal Terms – Instead of clean exits, expect complex structures with earnouts, seller financing, and minimal cash at closing.
🚩 Accelerated Burnout – The stress of managing an underperforming business while navigating a difficult sale process can lead to poor decisions and health consequences.
But there's a better approach. Don't let unprofitability force you into a fire sale or allow buyer assumptions to dictate your outcome. The path forward starts with clarity—understanding exactly what makes your business valuable despite current challenges.
That's precisely why we created Exit Navigator—to help you identify fixable issues, implement strategic improvements, and shift leverage back in your favor before going to market.
Why Exit Navigator™ Exists (And Who It’s For)
If your business is unprofitable or just stuck, you don't need fluff. You need clarity.
Exit Navigator™ is our flagship engagement for owners who want to sell—but aren’t ready yet.
It’s built for founders of $2M–$20M revenue businesses who are:
Struggling with profitability, growth, or fatigue
Unsure whether to fix, scale, or exit
Concerned about leaving money on the table
Not confident about how buyers will view their company
We approach your business the same way a sophisticated buyer would—and tell you what they’ll love, what they’ll flag, and what you can improve to shift the outcome.
What You Get
A comprehensive business appraisal and market value assessment
Clear identification of risks, red flags, and value gaps
Quarterly accountability meetings with specific 30 and 90-day action items
Unlimited email and text access to our team
And we guarantee it pays for itself—literally.
If you don’t sell your business for 25% more than our initial assessment - we refund you our fee.
Who It's NOT For
❌ Owners looking for a free valuation with no intention to act
❌ Founders unwilling to face hard truths or make changes
❌ Businesses with no operational structure or financial records
Exit Navigator is for real operators who want real answers.
Whether your plan is to exit in 6 months or 2 years, the decisions you make today will shape your outcome.
Quick Takeaways
✅ Yes, you can sell an unprofitable company—but usually at a steep discount
✅ Buyers care more about fixability than your past
✅ Most “unsellable” companies are just unprepared
✅ Exit Navigator gives you the map to shift leverage back in your favor
✅ Guaranteed 25% lift in the value of your business - or it’s free
Final Thoughts: Don’t Let Burnout Decide Your Exit
Selling your business should be a strategic choice—not a surrender.
Whether you’re months from market or still weighing your next move, Exit Navigator gives you clarity, leverage, and a real plan to shift the narrative.
Because the difference between a panic sale and a premium exit isn’t time.
It’s preparation.
👉 Let’s talk about your business and how to prepare for a high-impact exit.
Schedule a confidential call with our team HERE.
FAQ: Selling an Unprofitable Business
Can I still sell my company if I’m losing money?
Yes, but only to a narrow pool of buyers. Valuations and deal terms will reflect risk.
Who actually buys distressed companies?
Turnaround specialists, asset buyers, and private equity firms in “special situations.”
What if I used to be profitable?
That helps. If the cause of the decline is fixable, buyers may still see opportunity.
What if I don’t want to sell right now?
Even better. Exit Navigator helps you prepare now so you can sell from a position of strength later.
How Do I Prepare My Business for Sale?
Strong preparation is the foundation of a successful exit. This includes having clean financials, updated contracts, and reducing any operational dependency on the owner. A well-prepared business is not only more attractive to buyers but also commands higher value.
What Industries Does Breakwater M&A Specialize In?
While industry-agnostic, we specialize in helping service-based and software businesses with $1M–$20M in revenue and strong profitability. These are typically founder-led businesses with clean operations and growth potential.
Can You Provide Detailed Case Studies of Similar Businesses?
Yes, we have a library of both public and private case studies. These highlight real-world examples of how we’ve helped businesses navigate successful exits. We’re happy to share examples tailored to your industry or deal size.
What Is Your Experience and Professional Background in M&A?
Since 2019, Breakwater has closed over 50 transactions representing more than $150 million in total deal value. Our team brings a mix of entrepreneurial and investment banking experience, giving us insight from both sides of the table.
How Do You Determine Business Valuation?
Valuation is primarily based on cash flow and profitability, with industry trends and business model playing important roles. Every business is different, and our team customizes valuation models to reflect your specific situation.
How Do You Identify and Approach Potential Buyers?
We use a proprietary buyer database along with advanced tools to identify and vet strategic, financial, and institutional buyers. We also research your competitive landscape to uncover high-value buyers who may not be actively in the market—but are a perfect fit.
What Is a Business Exit Strategy?
An exit strategy is a structured plan for transitioning ownership while maximizing value. We work with business owners to develop a strategy that aligns with personal and financial goals—whether that's retirement, a new venture, or something else.
What Are Common Mistakes When Selling a Business?
Common missteps include inadequate preparation, emotional decision-making, poor valuation assumptions, and revealing too much too soon to buyers. Our process is designed to avoid these pitfalls and keep deals on track.
How Do I Know If It's the Right Time to Sell My Business?
The “right time” is different for every founder. It’s often driven by personal readiness—retirement, burnout, or a shift in priorities—as well as market timing. We help you weigh those factors objectively and make an informed decision.
Does Breakwater M&A Provide Resources for First-Time Sellers?
Yes, we specialize in working with first-time sellers. We provide educational resources, step-by-step guidance, and a clear roadmap so you’re never in the dark throughout the M&A journey.
Related Reads:
How to Find the Right M&A Advisor
A step-by-step guide to choosing the right advisor to maximize value, reduce stress, and avoid costly mistakes.
How to Sell a Business with $500K in EBITDA or More
Learn how buyers assess profitability—and how to position your $5M+ revenue business for premium valuation.
The Million Dollar Exit Guide - Part 1
In this 6 part series, learn how to build your own million dollar exit with actionable steps you can take in planning the exit of your business (it’s never too early to exit plan).
📥 Want the Full Guide?
Get access to The Complete Million Dollar Business Exit Guide (includes our Exit Checklist)—downloadable with one click and packed with tools, checklists, and insights.
Enter your email below for full access:
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