Higher interest rates, recession, valuations

by a searcher from The University of Michigan - Stephen M. Ross School of Business

1 year ago

How is everyone thinking about acquiring a small business given we are in a technical recession now and interest rates are expected to grow, The standard answer is buy recession proof or the multiples are low so should protect the investment, but how are investors thinking surviving this downturn, if any.

3 likes
190 views
14 comments

searcher from Clemson University

I am stress testing. I am less worried about interest rates as this is variable in most acquisition structures. Bigger question for me is whether the business can handle extreme volatility from a real recession.

1 year ago | like reply | 0 likes

searcher from Marquette University

Multiples tend to lag the market reality as most sellers tend to try to hold on to those multiples. Only after some time on a market will you get sellers on the whole to accept a lower multiple on their business. Same thing happens in real estate. I still haven't seen retail leases come off much in the last 5 years, although prices do seem to be coming down some.

1 year ago | like reply | 0 likes

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