Every leveraged M&A financing prices off one of these five rates. If you’re running an LBO model, sizing seller-financed paper, or benchmarking a proposed capital structure, this is the reference card. Numbers below are the last observation available at the most recent site deploy.
The reference rate that replaced LIBOR. Senior debt in leveraged M&A financings is almost always priced off SOFR plus a spread (SOFR + 500-700 bps for LBOs; SOFR + 250-400 for strategic acquirer term loans).
The overnight rate at which depository institutions lend reserves to each other. Its target range is the Fed's primary monetary-policy lever; movements ripple into every M&A financing decision.
The rate US banks charge their most creditworthy commercial customers. Owner-operator acquisitions financed by SBA 7(a) loans, seller notes, and small commercial term loans are typically quoted as Prime plus a spread.
The risk-free rate used in most cost-of-equity models. When the 10Y moves 100 bps, DCF valuations for stable cash-flow businesses move meaningfully — often 10-15% of enterprise value.
The spread over Treasuries paid by BB-B rated US corporates. When HY OAS is tight (below 400 bps), sponsor debt is cheap and multiples expand. When it widens (above 600 bps), leveraged M&A pauses.
Senior TLB pricing = SOFR + 500–700 bps for middle-market sponsor deals in a normal spread environment. When HY OAS is tight (below ~350 bps, as of the last reading), that band compresses. When HY OAS widens above 600 bps, primary issuance pauses and deal LOIs re-price or fall through.
Investment-grade or crossover strategics pay SOFR + 150–300 bps depending on rating and tenor. Boards benchmark against the 10Y Treasury when deciding whether to fund with new debt vs. cash on hand.
SBA 7(a) rates are quoted as Prime + a fixed spread (currently capped at Prime + 3.0% for loans over $350K, per SBA SOP 50 10). A change in Prime moves the payment on every $5M SBA-backed acquisition by roughly $250/mo per 25-bp move.
The 10-Year Treasury is the risk-free rate in most cost-of-equity models. A 100 bp move in the 10Y typically moves DCF equity value for a stable free-cash-flow business by 10–15%, holding all other assumptions constant.
Data on this page reflects the state of primary sources as of .
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Data for informational and educational purposes only. Not investment, legal, or tax advice. Verify current values at the primary source before using in a transaction. FRED® is a registered trademark of the Federal Reserve Bank of St. Louis.