A rate cut is worth less than you think.

FROM THE DESK OF FADI MALOUF | OCTOBER 2026

The Fed meets Tuesday and Wednesday. Every buyer waiting on a cheaper loan is watching that room.

Here is my read. If a deal only works after a rate cut, the deal does not work.

I have owned companies since 1999. A Fed meeting does not fix a bad price.

Prices rose 0.6% in September and 3.7% over the past year, per the Bureau of Labor Statistics.

The Fed's last move, on September 16, was a quarter point hike to a range of 3.75% to 4.00%. Its words: inflation remains elevated. The bank prime rate stood at 7.00% on October 21, per the Fed's H.15 release.

Inflation at 3.7% is not the backdrop for a quick cut.

The lesson. An operator in motion underwrites at today's rate. The one standing still underwrites at the rate they hope for. If the numbers only work after a cut, you are not buying a business. You are betting on the Fed.

The move. Price every deal at today's rate. Treat any cut as extra room, not as the plan.

A software company in Colorado that runs enrollment marketing for charter school networks, listed on BizScout. Asking $1.2M. Revenue $786K. Cash flow $252K, as reported by the seller. That is about 4.8 times cash flow at a 32% margin.

Illustrative math, not a lending quote. Ten percent down, a $1.08M loan at 10% over ten years. The payment runs about $171K a year. Cash flow covers it about 1.5 times.

Next, hold the payment to an illustrative 1.25 times cushion. At 10%, that cash flow supports about $1.27M of debt. At 9%, a full point lower, about $1.33M. A full point of cuts adds roughly $55K of room.

Now lose one customer. The listing counts 18 school networks. If one walks and takes $40K of cash flow with it, the borrowing room drops by about $200K.

The customer list moves this price almost four times more than the Fed does. Ask for revenue by network, and ask who runs it once the seller's 30 days of support end.

3.7%.

That is how much prices rose over the year to September, per the BLS.

What it means for an owner. If your costs rose with inflation and your prices did not, your cash flow shrank. In the teardown math, every dollar of yearly cash flow supports about $5 of a buyer's loan. Absorb $10K of cost increases you never passed on, and you gave up about $50K of what a buyer can borrow to pay you.

One page, this week, on the deal you are watching or your own business.

Write down the yearly cash flow. Write down the yearly payment on the loan the deal needs, at today's prime plus three points over ten years. For your own business, use the price you would ask, less ten percent down, the same way the teardown does. Divide the first number by the second.

If the answer is above 1.25, the Fed is not your problem. Move.

If it is below, the fix is price, structure or cash flow. None of those wait for Wednesday.

If the gap between what the bank will lend and what the deal costs is your question, take two minutes and find out where you stand.

Take the FM Capital Quiz

Forward motion,

Fadi

This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities, financial instruments, or investment products. FM Enterprises and Fadi Malouf do not provide legal, tax, investment, or financial advice. Any business, acquisition, or capital related discussion is subject to further review, appropriate due diligence, and applicable professional guidance.