Is it a red flag to buyers if I can't explain how I arrived at my own asking price?

Yes, and it's one of the more common ways sellers unintentionally weaken their own negotiating position. An asking price that you can't walk through — what earnings it's based on, what adjustments were made, and why — signals to a buyer that the number may be more aspirational than analytical, which invites them to push back harder and gives you less credible ground to defend it from.

The nuance is that you don't need to be a valuation expert yourself; you just need to understand, in plain terms, the reasoning behind your own number well enough to explain it if asked. If your price came from a formal valuation or a broker's analysis, understanding the key drivers behind it, rather than just the final figure, is usually enough to answer most buyer questions credibly.

If you genuinely can't explain your asking price, that's worth fixing before you're in a negotiation, not during one. Sitting down with whoever helped you arrive at the number, whether an accountant, valuator, or broker, so you can speak to it confidently, is a small investment that meaningfully strengthens your position. A business lawyer can also help you anticipate the questions buyers are most likely to ask.