Sterling Hamilton Wright (SHW) could be a target after suffering a 74% fall in profits.
The Lloyd's broker achieved operating profits of £75,000 last year, down from £287,000 in 2002. Turnover fell 7% to £7.7m from £8.3m.
Interest helped push pre-tax profit up to £290,000 against £550,000 in 2002.
Market sources suggested the broker would be sold within "two or three months" after a decline in the money it makes from guaranteeing business to the Lloyd's Market.
One senior source said: "It's going to be sold. The business it used to get from direct dealing has gradually drifted away."
Another suggested the company would be bought by Cox, owner of Lloyd's motor insurer Equity Red Star.
SHW chairman David Hughes refused to confirm or deny the company was for sale, but said: "That's the third name that's entered the arena in the last four months.
"It's very disconcerting for the staff. We're all working very hard to get this business right. We've looked at the business very closely and decided the way we want to go forward. We've made a decision and have gradually been implementing the changes, which has taken longer than anticipated, but we are now on track.
"There's a little more to complete and I certainly hope to complete in the next two or three months and we're looking forward to 2004. We'll be in good shape going forward."
The fall in turnover and profit followed disposals of the group's pension business and overseas interests last year.
Cox's managing director of broker services, Paul Dodds, said: "It's just another market rumour."
Turnover £7.7m, down from £8.3m
Operating profit £75,000, down from £287,000
Profit before tax £290,000, down from £550,000