Selling a Distressed Business
22 December 2025
Selling a distressed business can, from the owner’s standpoint, seem impossible. Not unreasonably, they’ll asked us, “Who would buy a distressed business?”
Admittedly, selling a distressed business can be a complex process, but it’s doable and, in fact, happens often. Aside from turn-around specialists, there are people and small partnerships that believe they have the know-how to take a business in trouble, make it profitable and subsequently sell it for a handsome return.
Over the past couple of years, we’ve published several posts on selling businesses that are losing money, a condition that would certainly qualified them as “distressed”. (I’ve linked to those posts in The Bottom Line section, below.) And a distressed business can be an opportunity for such buyers. If your business is suffering and you’re thinking of selling, here are a few key steps to take to get the most out of what you have.
1. Assess the Business’s Value
Even though the business is distressed, it almost certainly still has value—whether it’s its assets, customer base, intellectual property, franchise or licensing rights, or even brand recognition. But you have to know what your business or its assets are worth to even get started. Hire an appraiser or business valuation expert to help you determine the current value of the business based on its financials, assets, and market.
2. Get Your Financials in Order
Potential buyers will want to see your financial statements – profit and loss (operating) statements, balance sheet, tax returns, inventory and asset lists, etc. – so it’s essential to have a clear, accurate picture of the business’s debts, liabilities, and revenues. Even if the business is struggling, transparency will build trust.
__________________________________________________________________________________
Check out our new YouTube channel on how to value, price and sell a business.
Business owners, buyers, brokers, consultants and even real estate agents…resources – including courses, coaching and all the talents needed for selling a business – are available in The Brokers Roundtable℠
___________________________________________________________________________________
3. Identify and Evaluate the Reasons for Distress
Understanding why the business is distressed is crucial for finding the right buyer. It could be due to poor management, market changes, competition, financial mismanagement, or a combination of factors. This information will help you present the business more effectively to potential buyers.
4. Target the Right Buyers
This is critical. You need to identify the types of buyers who are likely to be interested in your business type as well as those who specialize in distressed businesses. These could be:
-
Private equity firms or investors who focus on turning around struggling businesses.
-
Strategic buyers such as competitors who may see value in acquiring your customer base or assets.
-
Turnaround specialists who have experience in managing distressed assets.
-
Individual investors or entrepreneurs who are willing to take on risk for a potential upside.
Interested in learning what a business is worth? Check out our video series, “How Much is My Business Worth“on our YouTube channel. The latest video discusses OWNER concentration.
5. Consider the Terms of Sale
Distressed businesses often don’t sell at full market value, so you may have to accept a lower price or sell at a loss. However, the buyer may be willing to take on certain liabilities or offer flexible payment terms to make the deal happen.
6. Legal and Financial Advice
Given the complexity of selling a distressed business, working with legal and financial advisors is critical. They can help you structure the deal, negotiate terms, and ensure that you comply with any necessary regulations.
7. Prepare for Due Diligence
Buyers will conduct due diligence, where they’ll scrutinize your business’s financials, operations, and assets. Be prepared to answer tough questions and provide any relevant documents or clarifications.
8. Negotiation
During the negotiation process, you’ll need to be flexible and prepared to compromise. Distressed businesses often don’t have the leverage to demand high prices, so the focus should be on finding a mutually beneficial solution.
REALTORS! Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses“, teaches you how to accurately value and successfully sell businesses.
Don’t Miss Out on the “Silver Tsunami”!
The Bottom Line
As mentioned at the beginning of this post, we’ve posted previously about selling distressed business. Those posts, generally with the with the term “losing money” in the headline, are listed here in the order posted:
2018 July 15 – Selling a Business That’s Losing Money
2023 Sept 4 – Selling a Business That’s Losing Money: Pt 1
2023 Sept 11 – Selling a Business That’s Losing Money Pt 2
2024 Feb 19 – Selling a Business That’s Losing Money
You CAN sell a distressed business but there are considerations that, if you pay attention to, the likelihood of a successful sale increases.
Check out our video series, “How Much is My Business Worth“on our YouTube channel.
“It’s not about ideas. It’s about making ideas happen.“
–Scott Belsky
If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.
Joe
Searching For…
A NOTE TO READERS: Our “Searching For…” feature has been moved to our online support platform, The Brokers Roundtable℠. It will appear there exclusively.
#business #businessacquisition #sellabusiness #becomeabusinessbroker #businessbrokering #businessvaluation #MergersandAcquisitions #buyabusiness #sellabusiness #realtor #realestateagents #Worldwide Business Brokers,
The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 1,000 in the world. He can be reached at jo*@*******************og.com
