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The M&A landscape is undergoing a significant transformation in 2025, with private credit emerging as a core engine driving deal-making. No longer merely an alternative to traditional bank financing, private credit is becoming a preferred tool for executing faster, more flexible, and more customised transactions, particularly in complex and competitive environments. For dealmakers attending Global Banking & Markets (GBM), understanding the private credit boom is essential to staying ahead.
The Rise of Private Credit: A Structural Shift
Private credit refers to loans made by non-bank lenders like asset managers, private equity firms, and credit funds. With global assets under management (AUM) nearing $2 trillion and projected to reach $2.8 trillion by 2028, private credit has filled a financing void left by traditional banks constrained by regulations such as Basel III and Dodd-Frank.
Its appeal lies in:
- Speed & Flexibility: Private credit offers tailored covenants, floating-rate structures, and quick execution—features banks often can’t match.
- Avoiding Equity Dilution: Companies can raise capital without issuing new equity, protecting shareholder value.
- Search for Yield: Institutional investors, especially in a fluctuating rate environment, value the relatively high returns and liquidity premium.
Private Credit’s Role in Accelerating M&A
Private credit plays a key role in expediting and optimising the M&A cycle:
- Faster Deal Timelines: Unlike syndicated bank loans, private lenders can approve and close deals within days or weeks, crucial for competitive auctions or distressed situations.
- Bespoke Structures: From PIK (Payment-in-Kind) interest to covenant-lite loans, private lenders offer tailored financing that suits everything from LBOs to corporate carve-outs.
- Higher Leverage & Certainty of Execution: Willingness to support higher leverage enables higher valuations. In many cases, private lenders fund the entire transaction, removing syndication risk.
- Middle-Market Strength: Especially powerful in the middle market (firms with $25M–$75M EBITDA), where access to traditional debt can be limited. These relationships often lead to repeat business and long-term capital partnerships.
Where Private Credit Is Making the Biggest Impact
Transaction Types
- Leveraged Buyouts (LBOs): Still dominant, with private debt financing around 77% of global LBOs in 2024.
- Middle-Market Acquisitions: Private credit fills the gap for sponsor-backed and independent buyers.
- Corporate Carve-Outs: Complex separations are often better suited to private lenders’ customized terms.
- Infrastructure Financing: Especially in energy transition, data centers, and transport sectors.
Geographic Hotspots
- Europe: Renewed M&A optimism driven by rate cuts, energy transition, and strong demand for data centre infrastructure.
- North America: Despite regulatory caution, private credit remains critical amid regional bank consolidation.
- Asia-Pacific: Slower momentum overall, but India and Japan stand out for divestitures and governance reforms.
- Latin America: Gaining attention, especially in Chile, Brazil, and Peru.
Industry Sectors
- AI, Tech & Data Centers: Rapid funding needs for digital infrastructure make these sectors top targets.
- Healthcare, TMT & Transportation: Continued M&A activity attracts private debt solutions for large-scale transformations.
Risks & Regulatory Concerns
Despite its growth, private credit is not without challenges:
- Opacity: Loans are often unrated and illiquid, with valuations based on models rather than market pricing.
- Limited Downturn Testing: Much of the growth occurred in a benign cycle. A major downturn could expose weaknesses in underwriting.
- Liquidity Mismatches: Retail-oriented “evergreen” funds could face redemption pressure during stress periods.
- Underwriting Quality: Increased competition might loosen standards, increasing the potential for credit losses.
- Regulatory Scrutiny: Global regulators are calling for more transparency and governance, especially around valuations and leverage.
While banking-style regulation may not apply, enhanced oversight is expected, particularly in valuation and liquidity risk management.
Outlook for 2025 and Beyond
Private credit is no longer a niche—it’s a mainstream driver of M&A. As banks and syndicated loan markets adapt, private credit funds with scale, strong origination platforms, and cross-asset capabilities are positioned to dominate large, complex deals.
Innovation continues, with structured finance, infrastructure lending, and retail investor access expanding the asset class's reach. While competition may compress returns slightly, demand for tailored, reliable financing remains strong.
Be at the Forefront: Join Global Banking Markets
At Global Banking & Markets (GBM), we recognise the central role private credit plays in today’s dealmaking environment. Our M&A events unite private credit providers, institutional investors, private equity sponsors, and corporate dealmakers in high-value forums designed to accelerate M&A success.
With curated networking, exclusive insights, and deal-focused programming, GBM events help you navigate private credit trends, mitigate risks, and capitalise on global opportunities.
Join us. Connect with the future of finance. Make your next big deal happen.
