In recent months, tariffs between Canada and the United States have dominated economic headlines, sparking significant uncertainty for many businesses. While industries highly dependent on cross-border trade are facing disruptions, there’s a notable segment of lower-middle-market businesses flourishing amidst this volatility: those demonstrating tariff resilience.
What Makes a Business Tariff-Resilient?
Tariff-resilient businesses typically share a few key characteristics:
- Domestic Supply Chains: Businesses sourcing locally or within regions not heavily affected by tariffs are naturally insulated from rising import costs.
- Niche or Specialized Industries: Companies operating in unique sectors with limited global competition often face less impact from international tariffs.
- Strong Local Customer Base: Businesses primarily serving domestic markets experience reduced exposure to cross-border trade disruptions.
Higher Valuations and Increased Buyer Interest
In today’s uncertain economic environment, these tariff-resilient businesses are becoming highly sought-after acquisition targets for several reasons:
- Lower Risk Profiles: Investors seek stability, and businesses that have proven resilient to tariffs inherently offer a safer investment proposition.
- Enhanced Competitive Advantage: Reduced exposure to tariffs means greater operational predictability, enhancing profitability and long-term growth prospects.
- Quality Buyer Pool: Businesses demonstrating resilience attract higher-quality strategic buyers and private equity investors actively seeking secure investment opportunities.
Bank Financing Challenges and Opportunities
Bank financing for acquisitions has become increasingly challenging due to economic uncertainties brought on by tariffs. Financial institutions have become more cautious, tightening lending criteria. However, businesses that remain unaffected by tariffs continue to enjoy favorable financing terms and greater accessibility to bank lending. This ease of financing further enhances the attractiveness and value of tariff-resilient businesses.
The Bottom Line for Business Owners
If your business has remained robust despite recent tariffs, now is an excellent opportunity to reassess your strategic options. Your business likely holds more value and greater appeal to potential buyers than before the tariffs came into play.
Tariff resilience isn’t just about survival—it’s about leveraging your strength in uncertain times to maximize your business’s value and marketability.
If you’re considering strategic moves or want to better understand your business’s position in this evolving landscape, let’s talk.
Jim Friesen, MBA, CPA, CM&AA
Founder | Partner
