Higher Interest Rates, Greater Uncertainty: What Happens to Private Company Values?

26 September 2026 | Lightcone Advisors Research

A business can gain customers and increase sales, yet investors may become willing to pay less for it. Today’s interest rates and geopolitical uncertainty help explain why.

The U.S. Federal Reserve raised its policy rate to 3.75%-4.00% on 16 September. Meanwhile, the yield on ten-year U.S. government bonds traded above 5%. These are different rates, but both influence the cost of money across the economy.

For private companies (businesses whose shares are not listed on a stock exchange) three effects matter most.

1. Investors expect more for taking a risk

When government bonds offer higher yields, other investments face tougher competition for money.

Investors need a stronger reason to commit to a private business, where success is uncertain and selling their shares may take years. One way to compensate for that risk is to pay a lower price today.

This particularly affects businesses whose profits are still far in the future. A promising idea may remain promising, while the price investors attach to it changes.

2. Conflict can make growth more expensive

Geopolitical disruption can raise energy bills, delay shipments and make essential supplies harder to obtain. September reporting showed oil remaining above US$100 a barrel amid uncertainty over Middle East energy supplies.

For a business, that can mean spending more to produce and deliver the same product. Customers may also postpone purchases.

If higher costs keep inflation elevated, interest rates may stay high for longer. Companies then face pressure from both operating expenses and the cost of borrowing.

The effect varies. Manufacturing and transport businesses may feel energy costs directly. Young technology companies may be more affected by the difficulty of raising their next round of funding.

3. Private-market prices take time to catch up

Listed shares change price throughout the trading day. Private companies can go months or years between funding rounds.

Their last announced valuation may therefore reflect an earlier, more favourable environment.

The adjustment might appear when the company raises money again, when an existing shareholder tries to sell, or when a planned stock-market listing is delayed. An unchanged headline valuation does not necessarily mean the business has escaped the pressure.

Businesses that already generate enough cash to fund their operations generally have more flexibility. Those that need repeated injections of money face harder choices: slow expansion, borrow at higher rates or sell a larger ownership stake.

Higher yields do not mean every private company must lose value. Strong growth and improving profits can offset the pressure. Equally, lower interest rates would not automatically solve the problem if they arrived alongside weaker customer demand.

The question becoming more important is straightforward: can the business turn its growth into cash before it needs more funding?

Disclaimer: General economic commentary for educational purposes; not a recommendation of any investment. Market information through 25 September 2026.