How do people think rising rates will affect prices in Small Business space

by a searcher from Harvard University - Harvard Business School

Mar 18,2022

After yesterday's Fed notes/discussion was wondering if anyone had any thoughts on how rising rates will affect this industry? It has been a LONG time since rates have seriously risen and naturally you would think that if debt became more expensive, multiples would come in, etc... Let me know if that is on point or to what extent that is the thinking

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member from City University of New York, John Jay College of Criminal Justice

Important q.

03/21/2022 | like reply | 0 likes

searcher from Saint Louis University

I agree with Colin. It will likely take persistently higher rates before multiples come in as sellers are reluctant to decrease prices and buyers are plentiful. Once highly leveraged deals fall apart on financing, we could see sellers move on price. Cash/equity purchases will be stronger; however investors could want a higher return to compensate for a higher discount rate. While this is true on the macro level, certain industries which benefit from rising rates may not see multiple compression.

03/18/2022 | like reply | 0 likes

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