What do interest rate hikes mean for multiples and deal flows?

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September 13, 2022

by a searcher from Dartmouth College - Tuck School of Business at Dartmouth in Wellesley, MA, USA

Trying to understand to what degree higher interest rate are becoming a net benefit for buyers to land a better deal on lower demand/lower multiples or if the effect is yet to be felt?

Similarly, have anyone seen more conservative underwriting from banks?

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commentor profile
Reply by an investor
from Nova Southeastern University in Miami, FL, USA
Valuations are definitely trending down = most sponsors consider both a DCF and comparables in the valuation process. With borrowing costs increasing, buyers are not seeing a benefit in the multiple compression.
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Reply by a searcher
from Yale University in Moscow, Russia
Higher interest rate = lower valuations. Firms won't be impacted as much as real estate will be.
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