In 2021, I sold my company to a private equity firm. It was an $80M consumer brand with strong EBITDA, and at the time, market conditions were almost ideal—low interest rates, abundant capital, and aggressive buyers. Clean numbers often meant multiple offers.
Fast forward to today—things have changed.
If you’re a founder-CEO planning an exit in the next 12–24 months, you need to understand what just shifted.
The Ripple Effect: Tariffs → Market Hesitation → Exit Challenges
Last week, reciprocal tariffs were announced on dozens of countries. This shook private equity—not because they can’t adapt, but because it added yet another layer of uncertainty to an already slow market.
Here’s what happened behind the scenes:
-
Secondary markets froze. LPs who fund PE firms started questioning their commitments, triggering calls to secondary buyers like Hamilton Lane.
-
Funds paused deal flow. Especially for companies exposed to imports, logistics, or volatile raw material costs.
-
Buyers grew cautious. Even solid companies are being reevaluated, and bid-ask spreads are widening.
If your business sources from China or depends on global supply chains, you may now be considered “risky” by default—even if your fundamentals haven’t changed.
What This Means If You’re Planning to Sell
-
Exit windows are narrowing. Fewer active buyers, and they’re being choosier.
-
Valuations are under pressure. Especially if margins are thin or supply chains are fragile.
-
Diligence is tightening. Buyers are digging deeper into sourcing, cost structure, and margin durability.
-
Deals are slower. Longer timelines, extended diligence, and more price-protection clauses.
-
You need a strong growth narrative. Buyers want to see you can grow despite headwinds.
Why This Hurts Small Business Exits the Most
Private equity doesn’t just buy billion-dollar companies. The majority of deals happen in the lower middle market—companies doing $2M to $20M in EBITDA.
When PE activity slows, small business exits stall. Offers drop. Terms tighten. Founders delay their exits altogether.
This is especially true for companies importing from Asia. Even if nothing has changed in your operations, buyers now view your business through the lens of tariff risk.
One secondary investor even compared buying supply chain–exposed companies right now to “catching a falling knife.”
Five Moves to Make Now
If you’re planning to exit in the next 12–24 months, start preparing now:
-
Tighten your financials — Have a clean, current Quality of Earnings (QofE) report ready.
-
Assess your supply chain risk — Be ready to explain how you’re mitigating exposure.
-
Build your growth story — Show buyers you have a plan to grow through volatility.
-
Talk to multiple buyers — Don’t bet on one perfect deal.
-
Get experienced guidance — Use an advisor who understands PE and current market dynamics.
The Good News: This Is Temporary
Markets move in cycles. Tariffs, rates, and sentiment all change. What we’re seeing now is a pause, not a permanent reset.
When clarity returns—whether through tariff rollbacks, rate stabilization, or renewed investor confidence—deals will rebound. When they do, prepared founders will be first in line.
I’ve been through it. This isn’t the end of exits—it’s just a new environment that rewards founders who stay disciplined and proactive.
If you’re unsure how these shifts affect your exit plans, now’s the time to talk.
