9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — get in touch if you know who we should be talking to!

After another year of subdued M&A activity and heightened competition from new entrants, direct lenders are looking to expand their reach and enhance their lending capabilities. This includes broadening their strategies and exploring other areas of the capital structure.

In turn, lower middle market and non-sponsored transactions have been building momentum. The appeal of both spaces was discussed during several BDC earnings calls for Q3 24.

As part of our series previewing 2025, 9fin sat down with Maggie Arvedlund, CEO and partner at investment firm Turning Rock Partners, to discuss the evolution of the LMM and the non-sponsored spaces over the past few years and what the future may hold.

1. Turning Rock Partners is focused on investing in founder-owned businesses. Tell us more about how and why you chose to focus on this segment of the market?

Turing Rock Partners has been committed to partnering with founders and owners/operators since the inception of our firm. There are a number of distinct benefits to investors in working with founders. One is that the market is much less crowded than where the majority of private investors traditionally focus on. That allows us to drive terms and benefit from a less efficient market. Another is that we look for an alignment of interests when we make investments. As a credit provider, we want our portfolio companies to retain majority control of their equity so they are incentivized to be as committed to their business as possible. An alignment between company management and investors leads to the best outcomes.