Interest Rate Rise

So interest rates have risen in the UK for the second time in 6 months, but what does this mean if you are either trying to sell your business or are thinking about it.

What it means to the general population is that because it will cost them more in debt repayments, the general population will have less disposable income to spend in your business.  Possibly therefore your turnover and profits will be lower, lower profits equal a business which has lower goodwill and is worth less.

Secondly for the person interested in buying your business, it will cost them more to borrow money.  As they can no longer afford the higher price due to higher debt repayments, they will be more likely to offer a lower price for your business.

Thirdly, a lot of business purchases have recently been financed by remortgaging property, higher interest rates mean lower house prices and less equity to buy your business.

So what does it mean to you?  Well it’s bad news as it means that you may, after today, have a business worth less, and if you want to sell, you may have to be more realistic with your price expectations, or run the risk of not selling at all.

This entry was posted on 11/01/2007 at 09:11 pm and is filed under The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.