Deal multiples changing with interest rates?

searcher profile

October 13, 2023

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

Have deal multiples decreased as interest rates have increased?

What is the range of deal multiples these days for active searchers? I'm about to start a self-funded search and assuming multiples have declined a bit. Want to ask what people are seeing as a quick market check!

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commentor profile
Reply by an intermediary
from University of California, Berkeley in Los Angeles, CA, USA
Yes cost of capital is increasing, and especially at the smaller end of the market, this can have massive impacts on valuation and ability for some deals to sell at all. Lenders however like the higher rates, so it's less about lenders rejecting if you're conservatively structured from a D/E perspective, and more about that you as the buyer may not be willing to structure as aggressively with debt which causes the seller to need to lower valuation expectations.
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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
From one lender’s view, not seeing LMM multiples changing much. So many buyers competing for deals keeping prices same. More equity and more creative seller note are helping to keep multiples in the same ranges even with higher rates.

Email me for links to my weekly office hours where we talk about all things SBA debt and acq structures and new sba rules. redacted

Will we see you at the BOOTH conf in a few weeks?
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