Waiting for rates to drop before you can afford a deal is exactly how you miss a deal. When some people hear the Fed has lowered rates, they think about buying a car or a house. Smart investors think about which deals they can do, and which cash-flowing businesses they can buy now that rates are lower.
If you’re buying a business and using debt to finance it, a lower interest rate doesn’t just make a given deal more profitable. It also lets you buy deals you might not otherwise have been able to afford. The question isn’t just what rates are doing, but what those changes mean for the deals available today.
Key points
- Waiting for lower rates can mean missing the deal.
- Lower rates make leveraged business acquisitions more profitable.
- Lower rates also widen the range of deals an investor can afford.
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