Perspectives
26 March 2025
Global M&A is recovering from its ten-year low, as global GDP outperformed expectations and central banks began easing monetary policy. Though activity levels remain well below the long-term average, last year deal volumes grew 7 per cent, according to data from Preqin, and values increased 15 per cent to $US3.5 trillion, edging the market closer to pre-pandemic levels.1
Despite the slower pace of interest rate reductions, persistent valuation gaps and ongoing geopolitical and macroeconomic uncertainty continuing to act as a brake on dealmaking, optimism of a rebound in 2025 is high.
“There was a welcome uptick in global M&A activity towards the end of last year, reflecting growing confidence among dealmakers,” says Bill Eckmann, Head of Principal Finance and Private Credit, Americas, at Macquarie Capital. “Deal flow remains far from normalised levels but mounting pent-up demand and improving economic conditions should inject fresh impetus into the market this year.”
Source: Dealogic
Renewed dealmaking momentum would likely further accelerate the growth of private credit. The alternative asset class continues to mature as an important alternative source of financing for an increasingly broad range of businesses and expand its appeal to an equally diverse range of investors. Global assets under management surpassed $US3 trillion during the year.2
Private credit has become a fast-growing asset class that’s taken a permanent share of the corporate lending market, with growth being driven by both secular shifts and repeat business from the expanding borrower base.”
Bill Eckmann
Head of Principal Finance and Private Credit, Americas
Macquarie Capital
A tightening of banking regulations following the GFC opened the door to private credit, as traditional lenders retreated from non-investment grade lending and embraced a more flexible capital model. Greater awareness and understanding, paired with banks’ retrenchment from leveraged lending, has fuelled its growth since.
“The popularity of private credit is a prime example of markets adapting to meet changing industry circumstances,” adds Tom Amster, Global Head of Financial Sponsors at Macquarie Capital. “It has become a critical and permanent solution, filling the gap that was left as the public market pulled back on lending to mid-market companies.”
For borrowers, a significant part of its appeal lies in the smaller pool of investors involved and the more direct relationship they can have with them. This can mean greater efficiency and certainty of deal execution, which is especially appealing in more volatile market conditions.
Funding solutions can also be more flexible than syndicated lending and better tailored to meet corporates’ needs on an ongoing basis.
“When you start a deal which has a six or seven-year life, for example, unanticipated events can happen that might need more capital. Having a relationship with a smaller group of lenders as opposed to a dispersed investor base, has proven to be much more flexible,” says Eckmann.
While for investors it provides an ongoing income through interest payments, greater portfolio diversity through exposure to corporates and sectors, and additional flexibility in capital use, making it an attractive asset class – one with strong tailwinds.
“Private credit offers a good risk-return opportunity for investors and as more businesses look to benefit from it, and market activity picks up, it offers even greater potential,” adds Eckmann.
Macquarie Capital's Principal Finance team focuses on providing flexible capital and debt solutions across North America, Europe and Australia and its private credit book has grown by more than 50 per cent over the last three years. This growth, Eckmann notes, is being driven by expanding client coverage that capitalises on the secular shift underway from public to private capital.
"We've been in the market for more than fifteen years and have supported our clients with close to 600 deals valued at over $US40 billion during that time," he says.
Macquarie Capital's global network, deep knowledge of local markets and sector niches complement the shift toward direct lending solutions, which have become a pivotal financing avenue for M&A transactions across a range of sectors.
A focus on strong sponsor coverage in the middle market, paired with advisory solutions spanning key verticals like software, tech-enabled business services, insurance services and infrastructure, has further allowed the business to focus on solutions across private capital, sourced from Macquarie’s balance sheet or third parties. Looking ahead, Macquarie Capital will continue to leverage the Group’s balance sheet for private credit investments, connecting ideas with capital and unlocking growth for its clients.
“Origination is all about the breadth and depth of relationships. Being part of a global business like Macquarie allows us to support clients in investing across a range of markets and sectors,” Eckmann adds. “Macquarie Capital has industry experts around the world which my team can tap into to complement our own origination capabilities.”
The ability to build a closer relationship with lenders is one reason why borrowers who once called on private credit because they had fewer alternatives are now making it their preferred solution.
Sole agent and lead arranger senior credit facilities for SIMPro, a global leader in field service management software, owned by K1 Investment Management
Supported ICG on its investment in Lomond Group, a leading lettings services provider with a growing presence in the UK
Agent on the financing of Upstack, a brokerage platform for digital infrastructure, owned by Berkshire Partners
Sole senior lender to Pollen Street in its acquisition of Keylane, a leading European software provider headquartered in the Netherlands
Between 35 and 40 per cent of Macquarie’s private credit business in Europe was from the existing portfolio last year, says Patrick Ottersbach, Head of Private Credit, EMEA, at Macquarie Capital, highlighting that borrowers increasingly appreciate its flexibility for expansion, working capital or refinancing.
Through close, often multi-year relationships, we directly support borrowers on their growth journey – getting to know them, anticipating their needs and responding more quickly than public markets could.”
Patrick Ottersbach
Head of Private Credit, EMEA
Macquarie Capital
“Some of our European clients have grown to the point where a capital market transaction might now be possible, but they prefer to continue working with us to leverage private credit to build their businesses."
As interest from investors in private credit continues to grow, Macquarie Capital is partnering with Macquarie Asset Management to grow and diversify its capital base and provide its asset management clients with access to high-quality middle-market direct lending opportunities in the US and Europe. The partnership will provide additional sources of capital alongside the Macquarie Group balance sheet while offering clients a defensive entry point into middle-market direct lending.
"By leveraging the broader capabilities and relationships across Macquarie to raise capital from traditional third-party investors, we are opening up opportunities in private credit to new investors looking to diversify their portfolios and the potential for stable cash flows," says Ottersbach.
Despite some ongoing and new market uncertainty, optimism about private equity dealmaking this year is as high as it’s been since the record levels of activity seen in 2021, says Eckmann, and this will provide further growth opportunities for private financing, given their synergistic relationship.
“Growing demand together with the more favourable macroeconomic backdrop are making the market increasingly conducive to doing transactions.”
“There’s a buildup of investment managers looking to exit portfolio companies and return capital to LPs, and with each quarter of subdued activity that buildup increases. The tipping point isn’t far off and when the market turns, I anticipate there'll be a significant increase in transaction activity, a lot of which will go to private credit,” says Eckmann.
Source: S&P Global Market Intelligence. © 2025 S&P Global. Analysis includes aggregate dry powder of global equity funds with vintage year between 2000 and 2024. Dry powder data is supplemented by Preqin.
An increase in dealmaking will present high-quality growth opportunities across both new and existing verticals. While structural growth will continue to drive capital markets activity across key megatrends such as digitalisation, demographic changes and the energy transition going forward, the pickup in deal activity will be broader reaching, says Amster.
“Sectors such as technology and infrastructure are areas of significant focus for private credit, but it’s an expanding universe. I expect considerable opportunity to open up, for example, in industrials – such as aerospace and defence – as well as the market’s expansion into asset-backed investments as banks seek to divest more of their balance sheet.”
“As deal activity does pick up, Macquarie Capital’s very much open for business,” says Ottersbach. “Thanks to our experience, established reputation, relationships and breadth of coverage, we are well-positioned to support clients in capitalising on opportunities as soon as they arise.”
“I expect the private credit market will see significant continued growth in coming years and therefore see it as being a significant contributor to our business going forward,” adds Amster.
Global Head of Financial Sponsors
Macquarie Capital
Head of Principal Finance, Americas
Macquarie Capital
Head of Private Credit, EMEA
Macquarie Capital
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