Interest Rates and Valuation Multiples in 2023

by a searcher from Temple University - The Fox School of Business

1 year ago

Aside from borrowing activities, interest rates won't have much of an impact on business operations. The profits for the buyer immediately take a hit, and the seller still wants their 3x multiples.  With less profits to reinvest, do smaller deals become less attractive? How do you see interest rates impacting valuation multiples in 2023?

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searcher from University of Virginia-Darden - Darden School of Business

Interest rates affect aggregate demand and likely the top line for any business. The more people can borrow the more of your stuff they'll buy. The less they can borrow under the same terms, the less they'll buy.

1 year ago | like reply | 1 like

searcher from IE Business School

Just my 2 cents: with the extent dependent on particular industry and business model, I think we should expect rising interest rates to have both direct and indirect effects on business operations. A decade of ZIRP means that business leaders across the economy haven't had to deal with the challenge of "real" rates since December 2008, and even if a business is well insulated against this its suppliers, customers, partners, and employees may not be.

1 year ago | like reply | 1 like

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