How to Sell a Business With Bad Financials

I’ll be honest with you.
The first time I tried to sell a business with rough financials, I felt like I was trying to pitch a sinking boat to someone who wanted a yacht.

You know that awkward moment when you hand someone your P&L and they tilt their head like a confused golden retriever? Yeah. That was me. Sitting across a conference table, pretending everything was fine while silently hoping they wouldn’t notice the profit line dipping like a roller coaster.

But here’s the twist.
You can sell a business with bad financials.
It isn’t pretty, it isn’t simple, and it sure isn’t glamorous, but it’s absolutely doable when you understand how buyers think, how value is really created, and how to present the full story instead of the scariest pages.

Let me walk you through what I learned the hard way, coffee stains and all.

Understanding Why Buyers Still Buy Struggling Businesses

People assume buyers want perfect companies.
Nah. Buyers want opportunity. And opportunity often hides inside messes.

I had a buyer once tell me, “If your business were perfect, you wouldn’t be talking to me.”
Oddly enough, that weird little line made me feel better about my wreck of a balance sheet.

Most buyers looking at companies with weak financials fall into three groups:

1. Turnaround hunters who get way too excited about fixing broken things.

2. Strategic buyers who only care about your customers, brand, or location.

3. Operators who see hidden value you’ve overlooked because you’re exhausted from running the place.

The trick is to understand which type you’re dealing with so you can frame the story the right way.

Turning “Bad Financials” Into a Story That Makes Sense

Bad numbers alone don’t kill a deal.
Numbers without context do.

When I finally accepted that my financials looked like a toddler scribbled them in crayon, I stopped trying to spin them and started explaining them.

I literally said, “Look, these numbers are rough. But here’s why they look like this.”

Then I showed:

• The spike in expenses caused by upgrading outdated equipment.

• The temporary revenue dip after dropping an unprofitable product line.

• The new client contracts that hadn’t yet hit the books.

• The operational mistakes I fixed after learning things the hard way.

Buyers hate surprises, but they absolutely respect honesty.
Your job isn’t to pretend your financials are good.
Your job is to show the buyer they’re fixable.

And trust me, buyers love “fixable.”

Highlighting Assets That Aren’t on the P&L

This part saved me.

Your financials tell one story. Your business tells another.

Here are the things buyers care about that don’t show up clearly in the numbers:

• Brand reputation

• Customer list and recurring clients

• Location or territory advantages

• Specialized equipment or technology

• Strong team members who could run the place

• Untapped markets

• Proven demand with poor execution

One buyer literally ignored half my P&L and said, “Your customer list is worth more than these expenses scare me.”

That was the moment I realized the value in a business isn’t always where you think it is.

Fixing What You Can Before You Sell

Here’s the part where I wish someone had slapped me with a clipboard earlier.

You don’t need to turn your business into a unicorn.
But tightening up a few key things makes a huge difference:

• Clean up your books so they’re readable without a decoder ring.

• Cut obvious waste.

• Document processes so a buyer sees how to run the place.

• Fix any glaring operational issues.

• Replace outdated equipment that causes constant headaches.

I’m not talking about a full transformation. Just enough so buyers see potential instead of problems.

A little cleanup signals stability.
And stability, even small amounts of it, makes buyers breathe easier.

Pricing a Business With Bad Financials Without Shooting Yourself in the Foot

This is the part most owners get wrong.
And honestly, I nearly did too.

You can’t price a struggling business like it’s thriving.
But you also shouldn’t give it away.

The best strategy I found was:

• Price based on assets.

• Add a bump for intangible value.

• Offer earnouts or seller financing to bridge the gap.

Earnouts saved my deal.
The buyer paid a portion upfront, then additional payments if the business hit certain targets.

It felt like saying, “Hey, if this works out like I think it will, we both win.”

Buyers love that sort of thing.
Confidence without arrogance.

Knowing When to Walk Away and When to Push Forward

Selling a business with bad financials requires thick skin.

I had buyers who ghosted me.
One who nitpicked every number like he was auditioning for a detective show.
And one who lowballed me so hard I laughed out loud.

But eventually, the right buyer came along.
Not because I found someone who didn’t notice the weaknesses.
But because I found someone who appreciated the strengths.

And that’s the whole point.

Final Thoughts: Your Business Is More Than Its Worst Numbers

If there’s one thing I learned, it’s this.
Your business is not defined by the rough months, the bad decisions, or the messiest pages of your books.

Buyers aren’t looking for perfection.
They’re looking for a story they understand and a future they believe in.

So if your financials are a little bruised, take a breath.
Tell the truth.
Show the value that doesn’t fit neatly in the spreadsheets.
And remember that someone out there might see potential where you only see problems.

You can sell a business with bad financials.
I’ve done it.
And if my roller-coaster P&L didn’t scare buyers away forever, you’re going to be just fine.