Can You Sell Your LLC If It’s Losing Money?

If your LLC is losing money, selling the business might feel impossible—but it’s more realistic than you think. While profitable companies are easier to sell, there’s still a market for businesses that aren’t turning a profit. The key is shifting the conversation away from losses and focusing instead on what your LLC still brings to the table.

Legal GPS Pro

Protect your business with our complete legal subscription service, designed by top startup attorneys.

• ✅ Complete Legal Toolkit
• ✅ 100+ Editable Contracts
• ✅ Affordable Legal Guidance
• ✅ Custom Legal Status Report

Learn more

In this guide, we’ll walk through how to sell a money-losing LLC, who might want to buy it, and how to position the sale so you get the best outcome possible—even without a healthy bottom line.

1. Yes, You Can Sell a Money-Losing LLC—But It’s a Different Kind of Sale

Many business owners assume buyers only want profitable companies—but in reality, some are more interested in future potential, valuable assets, or strategic positioning than last year’s net income.

That means even if your LLC is running at a loss, you may still have something buyers want. In fact, some buyers actively look for underperforming or distressed businesses that they believe they can turn around, merge with their own operations, or strip for valuable parts.

You’re not selling profits—you’re selling:

• Potential (the future upside)
• Position (your market presence or customer base)
• Pieces (assets, tech, team, or contracts)

This kind of sale requires a different mindset. Rather than trying to defend your financial performance, you’ll need to highlight what still has value and frame it as an opportunity.

2. What Makes a Money-Losing LLC Attractive to Buyers

Just because your LLC isn’t profitable doesn’t mean it has no value. The right buyer isn’t necessarily looking for profit—they might be looking for leverage. Whether that’s a shortcut into your market, a way to acquire loyal customers, or a chance to scoop up assets below market value, your business may offer more than you think.

What Buyers Might Find Valuable

Tangible Assets Even if your business is operating at a loss, things like vehicles, equipment, inventory, furniture, and commercial space can attract buyers—particularly those who already operate in your industry and can repurpose those assets quickly.

Intellectual Property and Brand Assets Buyers may be interested in:

• Your website, domain name, or software
• Customer databases or email lists
• Trademarked brand names, logos, or unique content
• Patents, codebases, or proprietary systems

Recurring Customers or Contracts Even a loss-making business with repeat clients or long-term contracts may have strong value to a competitor looking to expand quickly without building from scratch.

Market Access or Licenses If you’ve secured hard-to-get licenses, certifications, or relationships in a regulated industry (like cannabis, financial services, or healthcare), those assets alone can justify a sale.

Your Team In acqui-hires—common in tech and creative industries—a buyer may be interested in bringing on your employees or contractors, especially if they’re already trained and delivering high-quality work.

3. Common Buyer Types for Failing or Unprofitable Businesses

If your LLC is losing money, the pool of potential buyers might be smaller—but it still exists. The key is to understand who might benefit from buying your business even if it’s not profitable today. Often, these buyers are less focused on the numbers and more focused on what they can extract, build, or restructure from what you’ve already created.

Here Are the Most Common Buyer Types

1. Competitors Looking to Eliminate or Absorb You If you're operating in a shared market—even at a loss—you may still be diverting clients or holding a market position that a competitor wants. They may see value in acquiring your customer base, your location, or even just taking you out of the picture.
2. Strategic Buyers Seeking Assets These buyers aren’t just looking at revenue—they’re looking at what your business enables them to do faster. They might want your:

• Equipment
• Licenses
• Intellectual property
• Trained workforce

Even a loss-making business can represent speed, cost savings, or reach to the right buyer.

3. Distressed Opportunity Investors Some buyers specialize in scooping up businesses at a discount, refinancing debt, slashing overhead, and rebranding to flip or rebuild for profit. While they’ll likely negotiate hard, these buyers understand the risk and may still make a fair offer if the upside justifies it.
4. Vendors or Suppliers Wanting to Integrate Vertically If you’ve been a consistent customer to a supplier or vendor, they may see value in acquiring your business to gain control of their sales pipeline or move further down the value chain.
5. Employees or Managers With Insider Knowledge Sometimes the best buyers are already in your business. If you have someone on your team who believes in the vision and knows the operations inside and out, they might be interested in buying the business themselves, often with seller financing or SBA loan support.

4. Valuing a Business That Isn’t Profitable

Valuing a money-losing LLC is less about net income and more about what tangible and intangible assets the business holds. Traditional earnings-based methods don’t work when there’s no profit to analyze, so buyers and sellers typically turn to asset-based or liquidation value models to determine a fair price.

Asset-Based Valuation

This method looks at the value of everything the business owns minus its liabilities. If your LLC has equipment, inventory, furniture, a vehicle, or even deposits on a lease, those assets may be worth more to the right buyer than the business’s current earnings.

It’s common to adjust asset values based on:

• Fair market resale prices (not book value)
• Whether assets are encumbered by debt or leases
• How quickly they can be turned into cash or repurposed

Legal GPS Pro

Protect your business with our complete legal subscription service, designed by top startup attorneys.

• ✅ Complete Legal Toolkit
• ✅ 100+ Editable Contracts
• ✅ Affordable Legal Guidance
• ✅ Custom Legal Status Report

Learn more

Liquidation Value

If your business is shutting down, a buyer might value your LLC based on what its assets could be sold for quickly. This “fire-sale” pricing usually results in a lower valuation but can still attract investors or competitors looking for a bargain.

Explaining Add-Backs and One-Time Losses

Even if your LLC is losing money, not all losses are equal in the eyes of a savvy buyer. Help them see where value might be hidden by breaking down:

• One-time expenses (e.g., legal disputes, large equipment purchases)
• COVID-era disruptions or short-term market shifts
• Owner-specific expenses (e.g., personal car or health insurance run through the business)

These adjustments can improve the perceived health of your business and give you more leverage during negotiations.

5. How to Position the Sale Strategically

When your LLC isn’t profitable, how you present the business is everything. You’re not pitching a strong bottom line—you’re pitching potential. The right story, paired with a thoughtful presentation of your assets and systems, can make a big difference in whether you find a buyer—and what they’re willing to pay.

Highlight What’s Still Working

Even struggling businesses usually have parts that still function well. This might include:

• A recognizable brand or domain name
• Loyal, repeat customers
• Functional systems and processes
• Supplier or vendor relationships
• A strong team that can stay on post-sale

The more you can show that the core of the business is intact, the more likely a buyer will see the opportunity.

Make It Turnkey

Buyers are more willing to step in if they know they can operate the business with minimal disruption. Make things easy to take over by:

• Organizing financial records, vendor lists, and SOPs
• Transferring licenses, software, and contracts cleanly
• Having employees or contractors willing to stay on

If a buyer sees that they can start running the business on day one, even if it’s not yet profitable, they’re more likely to engage seriously.

Offer Support Post-Sale

If you’re willing to stay involved for a short period—say, 30 to 90 days—it can make buyers more confident in the transition. You might also offer:

• Seller financing
• Consulting during the handoff
• An extended training period

This support helps bridge the confidence gap for buyers and can justify a better price or smoother negotiations.

6. Legal and Tax Considerations

Even if your LLC is losing money, there are still important legal and tax issues to consider before making a sale. In some cases, these factors can actually work in your favor—especially if your business has valuable loss carryforwards or clean legal records that make it easy for a buyer to take over operations.

Handling Debts and Liabilities

If your business owes money—whether it’s credit lines, unpaid taxes, or lease obligations—you need to decide whether:

• The buyer will assume some or all of the debts, or
• You’ll pay off debts prior to closing, using sale proceeds or other means

Buyers are typically reluctant to take on old obligations unless they’re getting a steep discount. In an asset sale, most buyers will insist on leaving liabilities behind. In an equity (membership interest) sale, they may inherit more exposure—so legal due diligence becomes essential.

Selling Assets vs. Selling the Entity

• An asset sale involves selling only the business’s equipment, inventory, customer lists, etc.—often leaving the LLC shell and its debts with the seller.
• An entity sale (selling your membership interest) transfers ownership of the entire LLC, including any liabilities or unresolved legal issues.

Most buyers prefer asset deals for this reason: fewer surprises, cleaner break.

Tax Treatment and Losses

If you’ve been running losses, those net operating losses (NOLs) may have some value—but only under limited circumstances.

• In an asset sale, the buyer can’t use your NOLs.
• In a membership interest sale, the buyer might be able to use them if they maintain ownership continuity and meet IRS restrictions.

Check with a tax advisor to see if the losses can be carried forward to offset gains from the sale—or if they’ll simply expire when the deal closes.

Conclusion

Selling a money-losing LLC isn’t just possible—it’s often more doable than most business owners expect. While you may not get top dollar, the right buyer might still see strong value in your business’s assets, team, brand, or customer base. The key is understanding what you have, who might want it, and how to tell the story in a way that focuses on potential instead of past performance.

Whether you’re selling to a competitor, an employee, or a strategic buyer, start by taking an honest inventory of your business’s strengths. Then position it as a turnkey opportunity and be open to deal structures that help reduce risk—like seller financing or staying on temporarily to assist with the transition.

Before moving forward, consult with a CPA and attorney to understand the legal and tax consequences, especially when debts or loss carryforwards are involved. With the right planning and framing, even a struggling LLC can lead to a successful and meaningful exit.

Do you need a lawyer for your business?

The biggest question now is, "Do you need a lawyer for your business?” For most businesses and in most cases, you don't need a lawyer to start your business. Instead, many business owners rely on Legal GPS Pro to help with legal issues.

Legal GPS Pro is your All-In-One Legal Toolkit for Businesses. Developed by top startup attorneys, Pro gives you access to 100+ expertly crafted templates including operating agreements, NDAs, and service agreements, and an interactive platform. All designed to protect your company and set it up for lasting success.

Legal GPS Pro

Protect your business with our complete legal subscription service, designed by top startup attorneys.

• ✅ Complete Legal Toolkit
• ✅ 100+ Editable Contracts
• ✅ Affordable Legal Guidance
• ✅ Custom Legal Status Report

Learn more