AlixPartners Mid-Market Debt Report: 2024 Review and H1 2025 Outlook

Leveraged deals surged nearly 50%, fuelled by an uptick in LBO activity made possible by improving credit conditions. The number of refinancings also increased as private equity firms grappled with misalignment on valuations, limiting exit opportunities. 

Following a slow year in 2023, lenders were eager to deploy capital, and the number of deals involving both banks and private credit firms doubled. Looking ahead to 2025, narrowing valuation gaps and record levels of dry powder resulting in more borrower-friendly terms could unlock new opportunities, but geopolitical uncertainty seems set to reshape the market's near-term future landscape.   

The 22nd edition of the bi-annual AlixPartners' Mid-Market Debt Report covers more than 75 bank and non-bank lenders active in the UK and European mid-market (debt transactions valued up to €400m).   

At a glance:

Steadily declining inflation and interest rates laid the foundations for increased M&A activity. However, concerns over the Budget dampened business confidence and deal activity in Q3.

• Leveraged deal activity jumped 48% to 779 in 2024, up from 526 in 2023. On average, each participant of this survey completed 7 more deals than in 2023, up to 20.8 deals from 13.7, which is the highest we have reported.
   
• Facilities from the peak LBO activity in 2021 are starting to mature, so if exits are delayed, which many are, the facility must be refinanced. Our survey finds that refinancing activity increased by 53% in 2024.

Looking ahead, the mid-market debt landscape is poised for notable shifts in 2025, shaped by a combination of geopolitical uncertainty and emerging economic trends. Declining base rates are expected to narrow bid/ask valuation spreads, potentially unlocking greater M&A activity, which has remained muted amidst elevated hold periods for private equity. 
 

Read the full report below, or download it as a PDF.