A business losing money can often still be sold, but not on an earnings multiple, because there are no earnings to multiply. What is being sold is assets, contracts, customers, a license, a team or a lease, and pricing starts from those rather than from what the business once made.
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What still has value
Customer contracts and relationships, a trained team, a lease at below market rent, equipment, stock, a license that is hard to obtain, and intellectual property. Each can be worth something to somebody who already has the overhead to absorb them. That buyer is usually a competitor, which shapes the whole process and makes confidentiality harder.
Speed and honesty
Value falls as cash runs out, and a seller with three months of runway has far less negotiating room than one with nine. Start earlier than feels comfortable. Disclose the position plainly: a buyer will find it in a week, and a seller who presented a struggling business as a healthy one loses the deal and the credibility to do another.
When a sale is the wrong answer
Where liabilities exceed what any buyer will pay for the assets, an orderly wind down or an insolvency process may protect you better than a sale, and where personal guarantees exist the difference is very large. Take advice from an insolvency practitioner and a lawyer before committing to either route, because the duties owed by directors change as insolvency approaches.
Other questions people ask
Can I sell a business with debt?
Secured debt is normally settled at closing out of the proceeds. Where the debt exceeds the price, a sale requires the lender's agreement and the structure becomes a negotiation with them as much as with the buyer.
Will a broker take on a loss making business?
Some will, usually at a minimum fee. Many will not, which is itself information about how saleable it is.
Should I tell my staff?
Take advice on timing, because it interacts with your duties and with the sale. In a distressed situation the sequencing matters more than in a healthy one.