Two themes stand out
Private credit continues to be the one of most dependable sources of capital, and sponsors are showing renewed discipline in how they deploy it.
While the syndicated loan market remains uneven, direct lenders have filled the gap with speed, certainty, and relationship-based execution. For sponsors, particularly in the mid-market, those qualities now matter more than squeezing pricing.
Unitranche and club-style structures continue to dominate because they deliver clarity — fewer parties, shorter timetables, and terms that can be tailored to the borrower’s growth plan.
The rise of insurance capital
One of the most interesting shifts has been the growing role of insurance capital. Traditionally, insurers were passive participants in private credit, investing through funds rather than writing directly into deals. That is changing. Many are now deploying balance-sheet capital into acquisition finance, drawn by the predictable cash flows and built-in protections that well-structured mid-market deals provide. Insurers like these assets because they match long-term liabilities and offer yield with manageable risk. For sponsors, insurance-backed capital means faster execution and longer-term stability — an attractive combination in an uncertain rate environment.
A more mature ecosystem
This evolution has been helped by the maturity of the private credit market itself. Documentation has become more standardised, diligence processes more rigorous, and relationships deeper. Lenders and sponsors now know what good looks like, which shortens the path from term sheet to completion. Insurance-led platforms add further depth, bringing longer hold periods and willingness to structure flexibility into facilities — for example, delayed draws, earn-outs, or vendor participation — that banks often find harder to accommodate. The result is a more resilient ecosystem where capital can adapt to deal with needs rather than the other way around.
The upper-market shift
At the upper end of the market, some private credit managers are indeed pivoting toward larger, quasi-public borrowers — a reflection of the sector’s maturity and the influence of institutional investors seeking scale and liquidity. But that shift doesn’t diminish the mid-market story; if anything, it reinforces it.
As capital migrates upmarket, specialist lenders and insurer-backed funds are anchoring the true mid-market, where relationships, speed, and bespoke structuring still count for more than headline volume.
Sponsors, too, are behaving differently. After years of chasing growth at any cost, there is a clear return to fundamentals. They are focusing on fewer transactions where the business case, sector dynamics, and capital structure align. Leverage levels are more conservative, covenants are returning in a sensible form, and diligence is deeper. This is less about caution and more about precision — deploying capital where it can work hardest and most predictably. The best outcomes are coming from early engagement between sponsors and lenders, with clear communication on risk appetite, growth expectations, and exit strategy.
What deal teams should focus on
For deal teams, several themes stand out.
- Engage early with lenders that truly understand the mid-market and have access to long-term insurance capital.
- Be prepared for more forensic diligence on pricing power, customer churn, and working-capital dynamics.
- Build flexibility into financing structures from the outset — the ability to fund bolt-ons, delay draws, or recalibrate growth capital can be the difference between success and strain in a volatile environment.
The new normal
Private credit is no longer an alternative asset class; it has become an integral part of how the mid-market operates. The combination of insurer capital, disciplined sponsors, and relationship-driven lenders is producing a more stable, sustainable model for growth.
It may not generate the fireworks of earlier cycles, but it delivers what matters most in the current climate: reliability, alignment, and value creation over time.
The Finance and Restructuring team has experience across a variety of financial products, including all types of corporate lending and security, leveraged and acquisition finance, asset-based lending and real estate finance. Our multi-disciplinary approach means we have the ability to draw in experts from across the business. As a result, we are able to provide a comprehensive service to all of our clients.
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