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Friction

Perhaps you may have heard, but there is an ongoing slump in the M&A markets. Sellers don’t want to part with assets at the price that most buyers are willing to pay, since financing costs don’t line up with pre-2022 valuations. 

The elevated rate environment is casting a dark shadow over the US middle market, and by extension over private credit. 

We’ve documented at least three examples of such situations that have impacted direct lenders — as my colleague Shubham Saharan wrote this week on 9fin, Gables Engineering joins FDH Aero in the list of companies that failed to sell, meaning a lot of wasted effort for private credit firms.