The Middle Market: Great Expectations

Q1 ’12 brought big budgets and big aspirations and the expectation of a blockbuster year for M&A. Instead, volume has been less than robust, fueling a highly competitive market, as a supply demand imbalance has lenders aggressively competing for scarce quality deal flow. Middle market lenders are trying to stay disciplined but finding that pricing and structure, particularly for premium credits in the market, are testing their comfort zone.

Putting money to work is the headline, and lenders are eagerly waiting for the M&A pipeline to fill. Pent up demand from sellers looking to capitalize on a favorable exit window holds the promise that it will.