Cash Flow Under Fire: Why Tariffs Are Quietly Killing Underdiligenced Deals
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Cash Flow Under Fire: Why Tariffs Are Quietly Killing Underdiligenced Deals — and How Smart Buyers Stay One Step Ahead “There are known knowns… known unknowns… and unknown unknowns. It is the latter category that tends to be the most difficult.”
- Donald Rumsfeld, former U.S. Secretary of Defense
The Known Unknowns of 2025 Business Buying If you’re buying a business in 2025, your unknown unknown isn’t just a missed forecast - it’s a systemic vulnerability buried in your supply chain, disguised in a vendor agreement, or lurking behind margin assumptions that feel too stable for this market. At Pioneer Capital Advisory, we’ve advised on 82 SBA-financed acquisition closings since May 2022. And in Q2 2025, one trend is unavoidable: The bar hasn’t been raised on business buying. The floor has collapsed. Deals are still closing. But only for buyers who lead with narrative clarity, sourcing intelligence, and margin realism. This newsletter breaks down why tariffs are no longer just a macro headline and how they’ve become the silent killers of underdiligenced deals. Tariffs Are Now a Risk Variable, Not a Footnote Yes, tariffs are technically taxes. But in 2025, they function more like landmines: eroding cash flow, spiking COGS, and sabotaging DSCR before the ink is dry on your LOI. Here’s what’s live as of April 2025:
These aren’t theoretical- these are cash flow events. If your business touches international supply chains and you haven’t modeled for these inputs, you may be walking into a debt package that collapses within 60 days post-close. New SBA Lender Psychology: It’s Not Just About the Numbers Anymore A quiet but powerful shift is underway in SBA underwriting. Banks are no longer only asking: “Can this business cover its debt?" Now, they’re asking:
From a senior SBA lender at a national bank: “We’re now expecting the business plan to speak directly to sourcing, price elasticity, and margin variability. If it doesn’t, the file stops cold.” The Business Plan Is No Longer a Form — It’s a Stress Test In today’s SBA landscape, your business plan is being read as a proxy for your competence. Not fluff. Not formality. But as a risk narrative. A plan that commands respect includes:
Another SBA lender shared: “We’ve become more conservative on margin. But we’ve become more bullish on smart buyers. The plan is how we separate the two.” Why SBA Loan Brokerage Firms Are the Smart Buyer’s Edge At Pioneer Capital Advisory, we don’t just monitor the SBA market—we live inside it. Because we run a competitive process for every deal, we’re constantly in dialogue with lenders. That means we see the shifts before term sheets get retracted or approvals stall. We know:
That intelligence is the buyer’s edge. It’s why working with an SBA brokerage firm isn’t just helpful - it’s become essential. Case Study: Tariffs, Turnover, and a Deal That Collapsed in 43 days Earlier this year, we advised on a high-velocity distribution company. What looked like a strong acquisition on paper quickly unraveled post-tariff. The Buyer:
The Target:
Pre-Tariff Model (March):
Post-Tariff Reality (April):
This wasn’t a “bad business.” It was a strong business bought without margin foresight - and it couldn’t withstand macro whiplash. Own a Business? We’re Now Supporting SBA Refinances For operators with $1M+ in SBA-eligible debt, we’re now offering tailored support for:
We prioritize loans around $1M but take on larger profiles where the structure justifies it. If you haven’t stress-tested your balance sheet in the last 6 months, now is the time. Final Word: Underwriting Isn’t Tighter. It’s Smarter. Are You? In 2023, your deal lived or died on valuation. In 2025, it lives or dies on:
If you’re serious-six figures liquid, ready to articulate your plan, and clear-eyed about risk-we’re ready to help. But if your model assumes static inputs, your plan ignores COGS volatility, or you’re treating tariffs like tomorrow’s problem—this market will move on without you. Let’s Talk Strategy Book a call and we’ll walk you through what real SBA readiness looks like in 2025. Matthias Smith Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing. Thanks for reading! Feel free to reply directly to this email with any questions or thoughts. |
Pioneer Capital Advisory LLC
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