The Federal Reserve’s recent interest rate cut — with another reduction likely before the end of the year — could provide a tailwind for family and closely held businesses considering a sale. Lower borrowing costs may entice more buyers into the market. At the same time, uncertainty around tariffs and other geopolitical factors threatens to dampen activity, particularly from foreign purchasers. For business owners, the question remains: how should they weigh these shifting conditions when contemplating a transition?
David Stahl, partner at Plante Moran Wealth Management, counsels family businesses through mergers, acquisitions and employee stock ownership plans. He cautions owners against trying to time the market.
“With the Fed cuts, they were expected, and the path of future cuts — while subject to change — is certainly out there for public consumption as well,” Stahl says. “A lot of savvy buyers have been aware that’s likely happening. … The tariff and other uncertainties remain and likely aren’t going anywhere anytime soon. So, in terms of weighing Fed cuts, I would back up and just emphasize really focusing on controlling what you can control.”
That means ensuring both the business and its owners are ready, regardless of what happens with rates, tariffs or politics.
Start Early, Plan Often
Waiting for perfect economic conditions to proceed with a sale is a losing strategy because challenges never really cease, they merely change. “It’s tariffs right now, but there’s always something,” Stahl notes.
Owners who are serious about selling should begin preparing years in advance. “We typically see the most successful [sellers] starting at least a few years out. The further you can separate going to market from the pre-sale planning, the more objective and level-headed you can be, the more you can get out in front of some really potentially beneficial tax and estate planning moves.”
Know Your ‘Why’
Beyond financial readiness, family businesses must grapple with motivations for a sale — whether to empower the next generation, maximize value, attract investors or ensure continuity. “What are you really trying to get out of this?” Stahl says. “From a family perspective, how can you work through any differences of opinion, especially if you have several generations represented? If you don’t have the family aligned beforehand, it’s going to be really tough, and the buyer is likely going to see that.”
Strong governance structures, he adds, can prevent last-minute fractures.
Align With Personal Financial Timelines
A crucial step as a prospective seller is ensuring your financial independence post-sale. “’I currently have X of cash and investments outside the business. I need X based on my lifestyle to walk away and not worry about the future.’ If there’s a gap, knowing what that is and what a business sale needs to fill is an important first step,” Stahl explains.
That preparation enables families to pursue estate planning that reduces future tax burdens. “If they can get the ownership in the right places before a sale, well before fair market value is set, the difference can be enormous,” he says.
Build the Right Team
Even the most experienced family CEOs need support. “Having a really experienced, well-versed investment banker in the mix that knows your industry really, really well is going to be invaluable,” Stahl says. Alongside bankers, financial advisors, legal counsel and CPAs can guide both the transaction and its tax and estate implications.
Early involvement avoids last-minute improvisation. “A good advisor is going to want to be in the loop well in advance to make sure not just top-line sale value, but bottom-line income tax and estate tax value is as high as it possibly can be.”
Be Sale-Ready
Finally, Stahl points to the importance of addressing potential diligence issues before they arise. “The best [diligence] processes I’ve ever seen are still unbelievably stress-filled,” Stahl says.
Being as prepared as possible for prospective buyers to look under the hood of your business helps avoid the painful outcome of a collapsed deal, which can be challenging to recover from. “Whether it’s financial reporting, management team issues or customer concentration, the earlier you’re out in front of that, the better.”