Taking the Credit — The deals ain’t fine, it’s time to decline
- Josie Shillito
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Middle market leveraged buyout activity in private credit has made a cautious recovery in Q3 and Q4 so far, but market participants are not overjoyed with the quality on offer.
Lender education processes taking place in the UK, Europe and the Nordics for companies with under €50m EBITDA are sounding the market on leverage multiples that are out of step with what middle market lenders are prepared to offer.
“The market is more conservative and no one is prepared to do the wrong deal. Especially not now,” a lender on the lender education circuit told 9fin.
Beloved of private credit for many a year, the deal pipeline is awash with tech companies, mostly software solutions providers to specific sectors. However, they are joined by auto-parts providers and chemicals companies: cyclical opportunities that would command lower leverage.