I am currently wrapping up due diligence on a business acquisition and preparing for closing. Currently, I have sourced fixed-rate debt on the business, which I am happy with the terms and will be moving forward with. That being said, I would like to hear opinions from this audience as to which type of debt they are sourcing or would prefer in today's lending environment?

Generally, I believe a fixed-rate loan is preferential due to the predictability of the expense. For the most the of last two years rates have been unsteadily increasing, which has put stress on many recently acquired businesses with floating-rate debt.

Additionally, my company acquires multifamily real estate with a focus in affordable housing throughout the Carolina's. Currently, we are seeing many deals come to market due their upcoming loan maturity and difficulty to refinance . On the other hand, we are also finding deals with longer term debt, which allows for a favorable loan assumption. Would be curious to hear from others on this end as well as they are sourcing deals and funding going into 2024.

Feel free to comment below or reach out directly with any thoughts.

Thought it would be wise to add this based on some comments:

Our multifamily hold period is typically 7 years with a refinance in the 3rd year. Currently, only sourcing fixed rate debt.

Business acquisitions: currently 5 year hold, with plans to hold future acquired companies longer for the benefit of vertically integrating our real estate portfolio. Currently, have fixed rate debt on our upcoming acquisition, with plans to refi if there is an opportunity for a favorable rate drop down the line. Looking between variable and fixed rate debt on this deal is what sparked my post.