THE BUYER'S BRIEF - MARKET PULSE
Tariffs, Turmoil, and What Smart Buyers Do Next
42% of U.S. small businesses say tariffs are now a primary financial challenge. That number hits 69% in retail and 62% in manufacturing. If you're evaluating a deal right now, those numbers should change how you read every financial statement that crosses your desk.
Here's what happened. The Supreme Court struck down the IEEPA tariffs on February 20. Within hours, the administration imposed new tariffs under Section 122 - starting at 10%, then bumped to 15% the next day. Section 122 has a 150-day shelf life without Congressional approval, which means businesses are operating under tariff rates that could change again by summer. The tariffs on Chinese goods, steel, and aluminum remain untouched by the ruling. They fall under different statutes entirely.
For acquisition buyers, this creates two realities happening at the same time.
Reality one: businesses with import-dependent supply chains are getting squeezed. Margins are thinner. Owners are absorbing costs they can't pass through. Some are freezing hiring and pulling back growth plans. A Federal Reserve survey of over 6,500 small businesses found that 76% of companies facing higher foreign input costs have pushed at least some of those increases to customers. That means revenue might look stable on paper while the actual margin story is deteriorating underneath.
Reality two: service businesses, domestic manufacturers, and companies with minimal import exposure are largely insulated. Some are actually picking up market share as import-heavy competitors raise prices or pull back. These are the deals that score well on the Bulletproof criteria right now - stable cash flow, domestic supply chains, and pricing power that doesn't depend on what happens in Washington next month.
Here's what I'd do with any deal that touches imported goods or materials. First, get the trailing twelve months of cost-of-goods-sold data and compare it to the prior year. If COGS jumped more than 10% without a corresponding revenue increase, that margin compression is real and it's probably not done. Second, ask the seller directly what percentage of their inputs come from overseas and whether they've already renegotiated supplier contracts. Third, stress-test the SDE at 80% - which is what the Bulletproof criteria require anyway - but do it with the assumption that tariff costs stay elevated for at least 18 months. You can run those numbers in about 60 seconds at DealScore Pro.
Tariff chaos makes bad deals worse. But it also creates motivated sellers and better pricing on businesses that would have been overpriced six months ago. The method doesn't change. The opportunity just got more interesting.
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