Lower multiples in higher interest rate environment?
A question for searchers and investors; have you noticed any observable reduction in multiples on initial and bolt-on acquisitions given the higher interest rate environment globally?
Post a question, deal, job, etc...
Make a post...
by a searcher
from University of Sydney
in Sydney NSW, Australia
in Sydney NSW, Australia
2yrs ago
Share
2 Likes
442 Views
Loading...
reply
by a searcher
2yrs ago
in Houston, TX, USA
in Houston, TX, USA
Multiples decline in a higher interest rate environment as cost of capital is higher, so the underlying value of the assets to be acquired with cash (debt) reduces. First hand experience has taught me that some sellers are highly unrealistic, and you should not waste your time with a seller or deal that doesn’t work in today’s environment. Be straightforward about price and terms immediately in the process.
reply
by a lender
2yrs ago
from University of Utah in Sandy, UT, USA
from University of Utah in Sandy, UT, USA
I agree that the multiple has been declining based on the rising rate environment. There is always a dispute on where that multiple should be based on the perspective of the buyer or seller. I find that based on the cash flow of the business the multiple can be better determined (ie -higher CF better multiple). redacted orredacted
More on Searchfunder
Loading...