The latest interest rate rise will affect business sales, but its impact will depend heavily on who the buyer is and how they intend to fund the acquisition.
On 29 September 2026, the Reserve Bank of Australia increased the cash rate to 4.60%. For business owners considering a sale, the question is whether that change alters what a buyer can afford, what a lender will support, or how a buyer assesses risk.
At Magellan Business Sales, we have already seen financing pressure influence transactions this year, particularly in sales below $3 million where an individual buyer needs to borrow a significant portion of the purchase price. We have also seen larger corporate buyers continue to pursue acquisitions with confidence. The difference often comes down to the buyer’s access to capital and the strategic value of the business to them.
Individual buyers: acquisition funding is only part of the equation
An individual buyer may have the experience and ambition to acquire a good business, but still need substantial debt to complete the purchase. Higher borrowing costs can reduce the amount they can comfortably offer while leaving enough cash flow to service the loan and support themselves.
Working capital can create a second hurdle. After settlement, the buyer may need funds for stock, wages and operating expenses while waiting for customers to pay. A deal that appears affordable based on the purchase price alone may become difficult once those funding needs are included.
For sellers, this can show up as a lower offer, a request for different payment terms, a longer finance approval process or a transaction that does not complete. It does not mean an individual buyer is unsuitable. It means their funding capacity should be tested early, before both parties invest heavily in the deal.
Private equity and other debt-backed buyers: returns face a tougher test
Investors that use acquisition debt will also examine how higher interest costs affect their expected return. They may place more weight on stable earnings, cash conversion and the amount of capital the business needs after completion.
A business with predictable revenue and reliable margins can still attract strong interest. Where earnings are volatile or a major customer accounts for a large share of revenue, a leveraged buyer may seek a lower price or terms that shift more risk to the seller.
Corporate buyers: strategic value can sustain demand
A well-funded corporate buyer may be less exposed to changes in acquisition finance costs. It may have cash available, established banking facilities and a long-term reason to enter a market, expand its geographic reach or add a capability.
It may also be able to achieve savings or additional revenue that another buyer cannot: combining premises, purchasing, management, systems or sales channels. Those potential synergies can provide a buffer against higher financing costs and make an acquisition attractive even when an individual buyer struggles to fund the same deal.
That does not mean corporate buyers will pay any price. They will still test the quality of earnings, customer retention and the cost of integration. But where the strategic fit is strong, the cash rate may be only one part of their decision.
What should a seller do now?
Know which buyers can fund your business. The most enthusiastic party is not always the one most likely to complete. A sale process should consider the buyer’s likely source of funds, the working capital required at settlement and their capacity to meet lender conditions.
Make the business easier to assess. Clear financial information, credible adjusted earnings, sound working capital records and reduced dependence on the owner help buyers and lenders understand what they are funding.
Assess price alongside terms and completion certainty. An attractive headline offer has limited value if it depends on uncertain finance or asks the seller to carry substantial risk through deferred payments. Security and payment conditions matter as much as the stated price.
Higher rates may narrow the field for some businesses, especially where the likely buyer is an individual relying on significant debt. They do not remove demand from the market. The practical question for sellers is: which buyer profile can see the most value in this business and reliably complete the purchase?
Magellan Business Sales works with owners to identify likely buyers, prepare businesses for sale and manage the transaction through to completion. If you are considering a sale, or want to understand how current financing conditions could affect your buyer pool, contact us for a confidential conversation.