IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Seth Rudin. Mr. Rudin is a senior mergers & acquisition intermediary at IBA (www.ibainc.com):

Don’t Leave Cash on the Table: How Tariff Refunds Rebuild Your Business Value

The recent financial landscape for small businesses has felt less like a steady market and more like a high-stakes legal thriller. For nearly a year, American importers were trapped under the weight of the aggressive global “Liberation Day” tariffs. Overnight, profit margins shrunk, cash flows choked, and business valuations plummeted.

However, following a landmark U.S. Supreme Court ruling that struck down those initial duties, tens of billions of dollars in refunds are finally flowing back to business owners. For trade professionals, buyers, and sellers in the M&A space, this wave of refunds represents much more than a temporary cash injection. It marks a critical return to the true, baseline profitability of American small businesses.

The Heavy Toll of the Initial Tariff Round 

When the administration initially enacted sweeping global tariffs of up to 50% in April 2025, small businesses bore the heaviest burden. Unlike massive multinational corporations, small firms rarely have the leverage to demand immediate price concessions from overseas suppliers, nor do they possess the capital to instantly re-engineer their entire supply chains.

To survive, owners were forced to make impossible choices. Many swallowed the cost, watching their net income evaporate. Others passed the expense to consumers, risking market share. On paper, healthy enterprises suddenly looked distressed. For owners eyeing an exit, the timing couldn’t have been worse; their financial statements no longer reflected the true earning power of the companies they built.

The Turning Point: Restoring Real Cash Flows 

The financial narrative shifted dramatically on February 20, 2026, when the Supreme Court ruled that the administration had exceeded its authority, ordering a massive refund program. While the administration has since pivoted to new, more legally resilient Section 301 duties targeting forced labor, the court-ordered restitution of the 2025 funds has created a vital financial reset.

Smart business owners are not just treating these refunds as a windfall to be spent on general overhead. Instead, they are working alongside trade professionals and accountants to meticulously restore their historical financials. By mapping out the precise impact of the initial tariffs and injecting the recovered capital back into historical cash flows, owners are demonstrating what their businesses are actually capable of earning in a normalized environment.

The Valuation Factor: How IBA Adjusts for Tariffs

In the world of mergers and acquisitions, the true test of a business’s worth lies in its Seller’s Discretionary Earnings (SDE). When a business is evaluated for sale, unique, non-recurring, or distorted expenses are routinely adjusted to show a buyer the true normalized return of the enterprise.

This is where sophisticated valuation practices come into play. Prominent business brokerages, such as IBA, approach these anomalies with strict analytical rigor. In an adjusted SDE analysis, our expert intermediaries isolate the initial tariff expenditures as extraordinary, non-operating, or non-recurring items.

Because the initial 2025 tariffs were ruled unlawful and are actively being refunded, they represent an artificial suppression of historical earnings. An experienced M&A professional will normalize these figures by adding back the paid tariff amounts to the historical SDE. Now that the refunds are hitting corporate bank accounts, this adjusted analysis bridges the gap between historical turbulence and future earning potential. It ensures that a seller is not penalized for an unconstitutional tax, and that a buyer receives an accurate, transparent view of the company’s real cash-flow capacity.

The Takeaway for Owners and Buyers

For small business owners considering a sale over the next few years, documentation is your greatest asset. It is vital to maintain precise records of every tariff dollar paid under the invalidated regime, alongside the corresponding refund receipts. Proving exactly how and when these funds distorted your cash flow allows your advisory team to build an airtight valuation case.

For buyers, the current environment demands a look beyond face-value tax returns from 2025 and early 2026. A company that looked less profitable last year may actually be a highly lucrative, robust enterprise once the tariff distortion is removed.

The refund era isn’t about capturing free money—it’s about reclaiming the true financial identity of small business America. By aligning your financial reporting with real cash flows and utilizing proper SDE adjustments, you ensure that the true value of the business takes center stage.

If you have questions relating to the content of this article or the process associated with selling a business in Washington or Oregon, Seth Rudin would welcome the opportunity to talk with you. Mr. Rudin is licensed to sell businesses & real estate in both Washington and Oregon.  Mr. Rudin can be reached at (425) 454-3052 or [email protected].    

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.