For many business owners, determining when to sell is both an art and a science. Wait too long, and favorable conditions slip away. Move too soon, and you risk leaving upside on the table. In today’s market, shifting interest rates are one of the most powerful external forces influencing that decision. At Ascension Advisory, we believe that sellers who understand how rate movements affect valuations and timing will be in the strongest position to achieve premium outcomes.
When central banks lower their policy rates, the effects ripple through the economy. Cheaper capital reduces borrowing costs for buyers, which increases the price points that acquisitions can justify. Because many deals rely on leverage, each percentage point of rate reduction allows buyers to pay more without compromising their required returns.
In a high-rate environment, buyers must use less debt or accept greater risk, which limits how much they can offer. As interest costs rise, valuation multiples tend to compress. When rates fall, the reverse happens. Buyers gain flexibility, and valuations begin to expand.
At the same time, lower yields on safe assets encourage institutional capital to seek higher returns elsewhere. Private markets, including mergers and acquisitions, often benefit from this rotation of capital. The result is a more competitive buyer pool and a lift in deal activity.
Consider the case of Apex Components, a mid-sized manufacturer of precision parts serving the industrial and automotive sectors. Apex generates $4 million in EBITDA and has a strong, stable customer base.
In 2023, when borrowing costs were still near record highs, private equity groups looking at Apex were limited in how far they could stretch on valuation. Debt financing was expensive, and lenders were tightening their terms. Under those conditions, Apex’s offers averaged around 4.5 times EBITDA.
Fast forward to late 2025. Interest rates have started to fall, and lender sentiment has improved. The same buyer pool revisits the market, now with a lower cost of capital and more flexible credit terms. The result is that Apex receives offers closer to 6 times EBITDA. The company’s performance has barely changed, but the math behind the deals has.
That difference in timing, driven almost entirely by macroeconomic conditions, translates to millions of dollars in enterprise value.
Many indicators suggest the current cycle is turning in favor of sellers. Inflation has cooled, credit markets are reopening, and private equity funds are sitting on significant undeployed capital. Strategic acquirers that paused acquisitions during rate hikes are again evaluating targets.
This creates a window where well-prepared business owners can command strong valuations. However, timing remains key. If too many owners enter the market simultaneously, supply increases faster than buyer demand, and valuations can flatten. Owners who start preparing now can position themselves to go to market before that saturation occurs.
Historically, valuation “floors” tend to rise during the early stages of an easing cycle. For example, a business that might have traded for 4.5 times earnings in 2024 could see the same buyers paying closer to 5.5 or 6 times as rates decline. That increase can be enough to change a good outcome into a great one.
The best outcomes come from preparation, not reaction. Business owners who wait until the market looks obviously favorable often miss the peak. Preparing for an exit takes time, coordination, and clarity.
The process typically begins with internal readiness. Clean financial statements, stable leadership, and a clear growth story all contribute to buyer confidence. Consistency and transparency are the foundation of a strong valuation.
Once the business is ready, attention shifts to the market. Understanding which types of buyers are most active, private equity firms, family offices, or strategic acquirers, and how they are approaching deals within your industry helps set realistic expectations. Aligning your sale process with periods of heightened buyer demand can make a measurable difference in valuation outcomes.
From start to finish, most sale processes span six to nine months. That timeline includes preparation, outreach, management meetings, negotiation, and closing. Beginning the planning phase now positions owners to take advantage of potential rate cuts and renewed buyer enthusiasm over the next several years.
It is tempting to wait for the “perfect” environment, but markets rarely stay still long enough for perfection to exist. Even in a falling-rate cycle, several risks can erode valuation potential.
If rates continue falling, sellers who rush to market early may leave value on the table. Conversely, if the business underperforms while waiting, buyers will discount earnings regardless of where rates sit. Macro factors such as political shifts, regulatory changes, or supply chain disruptions can also stall buyer enthusiasm.
Perhaps the biggest risk is crowding. When every seller decides the time is right, buyers gain leverage. The competition that once benefited sellers flips in favor of acquirers who can now negotiate more favorable terms. Acting before the crowd typically yields a stronger result.
For business owners who also own their real estate, sale leasebacks are another way to take advantage of a falling-rate environment. As cap rates compress, valuations for properties improve, allowing owners to unlock more liquidity while maintaining operational control.
Many of our clients use sale leasebacks as part of a broader exit plan. Some execute the transaction first to fund growth or debt reduction, while others pair it with a company sale to maximize total value. In both cases, lower interest rates enhance the economics of the transaction. Buyers can achieve stronger yield profiles, which translates to higher purchase prices for sellers.
By combining strategic sale leasebacks with disciplined M&A timing, owners can extract value from both sides of their balance sheet—the business and the real estate—without disrupting day-to-day operations.
Partnering early with an experienced advisory firm can make the difference between reacting to market shifts and anticipating them. At Ascension Advisory, our process begins well before a sale process formally launches. We analyze where your business sits in the broader market cycle, benchmark it against comparable transactions, and develop a tailored strategy to position it for success.
Engaging ahead of the curve means your financials, story, and operational metrics are already optimized when buyer appetite returns. It also provides optionality. You can accelerate, pause, or reposition based on real-time market feedback without losing momentum.
In Q4 2025, the most strategic move for many owners is to prepare, not to wait. Preparation creates choice, and choice creates negotiating power.
Interest rates will continue to move through cycles, but the fundamentals of good selling never change. Strong businesses, well-prepared financials, and clear narratives will always attract premium buyers. What fluctuates is how much those buyers can afford to pay, and that part is driven by macroeconomics.
In a falling-rate environment, the tide is beginning to rise again. Those who understand how to read it and position accordingly will capture the most value.
At Ascension Advisory, we help business owners anticipate that moment. Whether through a company sale, a sale leaseback, or both, we work to ensure that timing, strategy, and execution align perfectly to create lasting value.
The window is opening. The question is not whether it will close, but whether you will be ready when it does.