Two numbers from the futures market, as of August 30: 64% odds of a Fed hike at the September meeting, and 88% odds that rates finish the year higher than they are now. Markets change their minds, and neither number is a forecast from this firm. But if you own a business you expect to sell in the next year or two, those odds should change how you spend this fall, and the right response is more specific than a vague sense of urgency.
A sale is a lead time, and rates move inside it
The decision to sell and the wire hitting your account are separated by months of work: financials assembled and recast, a valuation built, the business packaged and taken to market confidentially, buyers qualified, a letter of intent negotiated, diligence survived, and a lender's underwriting cleared. None of those steps compress well, and the SBA process at the end moves at the bank's pace.
Which means the rate environment that matters to your deal is not today's. It is the one in effect when your buyer's loan funds. Most SBA 7(a) acquisition notes float against Prime, and Prime follows the federal funds rate the day it moves, so a hike that lands mid-process lands on your deal. An owner who starts thinking in December is planning a closing at next year's cost of money, whatever that turns out to be.
Sellers consistently misjudge this because the visible part of a sale, the negotiation, sits at the end of a long invisible runway. By the time offers arrive, the rate environment they were built in is already baked into every number on the page.
What a higher rate takes out of your proceeds
The mechanism is short. The buyer borrows most of the purchase price. The lender sizes that loan against your documented cash flow using a coverage test, a required margin between earnings and the annual payment. When the rate rises, the payment rises, and the loan the same cash flow supports shrinks. On a 10 year note, each point of rate cuts borrowing capacity by roughly 5% at a fixed coverage floor.
Put numbers on it. A business showing $500,000 of documented cash flow supports a $400,000 annual payment budget at a 1.25x floor. At an illustrative 10.5% that budget services about $2.47 million of acquisition debt. One point higher, about $2.37 million. The missing $100,000 does not vanish from the conversation. It moves into the negotiation, as more buyer equity, a larger seller note, or a smaller price.
The gap gets closed somewhere, and sellers rarely get to choose where, because by the time it appears the deal is already in motion and the leverage sits with whoever is least afraid to walk. That is the full mechanism behind a line we have used elsewhere: every month you wait, your buyer's money costs more. It is arithmetic, and you can run it yourself in the SBA Affordability Model on our home page.
The wrong conclusion to draw
None of this says dump your business on the market to beat the next Fed meeting. A listing rushed out to save a quarter point usually gives back far more than a quarter point. Weak documentation stretches diligence. Stretched diligence kills deals. A dead deal costs you a season, sometimes a key employee who heard about the sale, and occasionally the confidentiality of the process itself. Rate risk is real but small per month. Preparation risk is large, and it is entirely yours to remove.
The other wrong conclusion is treating the odds as a promise. Sixty four percent is not certainty, and futures reprice on every data release. The point of the numbers is not that a hike is guaranteed. The point is that the direction of the pressure is known, the lead time is long, and preparation is valuable in every branch of the tree. If rates rise, the prepared seller closes before the worst of it. If rates hold, the prepared seller simply closes well.
The right use of the calendar
A business that starts preparing now holds options a December starter does not.
Get the financials lender ready first. From October 1 the SBA tightens acquisition underwriting for first time buyers, raising the coverage floor to 1.25x and barring projections from the test. Historical, documented cash flow is what finances your deal. If this year's statements need cleaning up, every month of clean operation added to the record strengthens the file a lender reads. Add-backs a bank will not credit are not earnings for this purpose, however real they feel.
Know your number before a buyer proposes one. A valuation built on current lender math tells you whether today's market meets your goal. If it does, you can move deliberately and from strength. If it falls short, you know exactly what to fix and how long you have, which beats discovering the gap inside a negotiation.
Decide your walk-away structure in advance. If rates rise mid-deal, the buyer's financing shrinks, and the ask that follows is predictable: seller financing to bridge the gap. Deciding now how much paper you would carry, on what terms, and against what security keeps that conversation from being settled under deadline pressure. Owners who improvise structure at the eleventh hour give away more than owners who arrive with a position.
Three conversations to have before you list
The first is with your CPA, about taxes. How the sale is structured decides how much of the price survives the trip to your account, and some of the moves that help, like timing income or cleaning up the entity, need a tax year to work with. Our article on the taxes owed when selling a business in Georgia covers what that conversation should include.
The second is with a broker who prices against lender math, about value. Not a flattering number to win a listing, but the number a loan committee's arithmetic will actually support, tested at today's rate and a point above it. That number is the honest input to every other decision on this page.
The third is at home. A sale that funds at a rate-trimmed price either meets your family's number or it does not, and knowing which before buyers are in the room keeps the process from being steered by sunk costs. If the trimmed number does not work, the right move may be a year of preparation before any listing, and it is far cheaper to learn that in September than in a diligence meeting in March.
What buyers are doing right now
It helps to know what the other side of the table is doing with the same numbers. Serious buyers spent August repricing their target lists against higher payment assumptions and stress testing every deal at the current quote plus a point. The thinnest capitalized buyers are stepping back, because their math fails first. The buyers who remain are better funded, more selective, and faster to move when a clean file crosses their desk.
That reshapes who you will meet in a process. A prepared seller faces fewer bidders than in a cheap-money year, but the bidders who show up can actually close, and they pay for certainty: clean books, defensible add-backs, coverage headroom at the asking price. The sellers who struggle in a hiking cycle are the ones asking a thinner buyer pool to fund a price the arithmetic no longer supports.
The window logic, without the mysticism
Owners ask when the right moment to sell is, expecting a market call. The honest version is simpler. You cannot predict the futures curve, but you can know your own number, know what lender math supports today, and know the size of the gap between them. When the supported number meets your goal, the window is open, whatever the Fed does next. When it does not, the calendar question answers itself: the time goes into fixing the file, because waiting on rates to rescue a weak file has the odds against it in both directions.
That framing also settles the panic question. A hike does not close your window. It trims the supported number by a measurable amount, and if your deal carried headroom, the window stays open through it.
If you are two or more years out
Then September's meeting is noise for you, and the honest advice is to ignore the odds entirely. Rate cycles turn, and nobody selling in 2028 should organize their life around a 2026 futures curve. What compounds in your favor over two years is the same list as always: earnings quality, management that runs the business without you, customer concentration below the thresholds that scare lenders, and books a banker can read without an interpreter. Work that list and the rate environment you eventually sell into matters far less, because your deal will carry headroom in any of them.
Where to start this week
Twenty minutes on the Sale-Readiness Scorecard tells you where the file is weak. A conversation with us after that puts a current, lender-tested number on the business, so the timing decision rests on real figures rather than odds and instinct. Whether the Fed moves in September or holds, an owner holding a defensible valuation and a clean file is in position to choose a window instead of being chosen by one.