The year the recovery stuck

Private-debt deal flow recovered to 702 in the year to Autumn 2024, up from the 593-deal rate-shock trough and closing in on the 2022 high of 871. Debt funds held 77% of UK mid-cap transactions in the first half of the year, M&A activity led the book, and UK deal pace in H1 2024 already exceeded half the full 2023 total. 2024 confirmed the thesis: good credit gets financed across the rate cycle, not only in the cheap years.

This is the desk’s annual stock-take of the lower-mid-market debt environment, drawn from the data the major houses had published by the close of 2024. It is not a forecast. Three questions frame the read: did deal flow recover; who supplied it; and what does the composition of the book tell a borrower planning for 2025?

Did the market actually recover in 2024?

Yes, on the primary measure. Deloitte’s tracker, the closest thing the European private-debt market has to a headcount of actual transactions, reported 702 deals in the trailing twelve months to its Autumn 2024 edition, up from 593 in the prior Spring reading. That is the first half-year improvement since 2022, and it takes deal flow back above the 2023 reading, if still below the 2022 peak of 871. The 2023 dip, caused by the fastest rate-tightening cycle in forty years, did not erase the long-run direction; it interrupted it.

The shape of that chart is worth reading carefully. The trough was not a collapse: deal flow fell from 871 to a low of 593, roughly a third off the peak, before recovering. And the recovery was not driven by rate cuts alone: the first leg, from 600 to 593 in Spring 2024, was essentially flat, and then the Autumn 2024 jump to 702 landed before the Bank Rate had moved materially below 5%. Capital found its way back into the market before the rate cycle completed. That is what a structural supply story looks like.

Who is supplying the UK mid-market?

Debt funds, overwhelmingly. On Houlihan Lokey’s UK-specific read, debt funds financed 77% of UK mid-cap transactions in each of the first two quarters of 2024, the same high-water mark the UK set when the recovery began. Banks regained some share through 2023, when rate volatility kept fund pricing wide and clearing banks competed hard on margin; that episode appears to have been a tactical skirmish rather than a structural shift. By 2024, the structural picture was reasserted.

The H1 2024 column in the chart above shows 102 transactions across the first two quarters: 47 in Q1 and 55 in Q2, both hard from the Houlihan Lokey decks. That is a half-year count, not directly comparable to the FY2022 and FY2023 full-year figures beside it. Six months at 102 deals already put 2024 on course to exceed 2023’s 200-transaction full year.

The UK’s position within European private debt has also been broadly stable. Through all the editions of the Deloitte tracker from 2020 to 2024, the UK has accounted for roughly a third of cumulative European private-debt activity, a share that held even as the European market itself grew from 2,272 to 5,250 cumulative deals. The pool that a UK borrower can run a process across is materially larger than it was four years ago, and the UK slice of that pool has held its weight.

What the deal book says about 2025

The composition matters as much as the volume. Through the rate-shock years, the mix tilted toward refinancings: companies managing existing debt rather than using it to grow. As 2024 progressed, M&A-led activity returned: Autumn 2024 showed 70% of deals M&A-focused, and the LBO and bolt-on categories led the count. Refinancing, while still a meaningful slice of the book, was no longer dominating it.

For a lower-mid-market company not in a PE-backed transaction, the practical implication is the same as it has been throughout this series. The pool of lenders is larger, it is active, and it needs to deploy. A borrower approaching the market in 2025, whether for a growth facility, a refinancing or an acquisition line, is not arriving at a moment of scarcity. The constraint is on the credit story, not the capital.

The one note of caution runs in parallel. The 2026 maturity wall is building: the Covid loans drawn in 2020 hit final maturity in 2026, and the Bank of England had already flagged roughly 30% of UK leveraged-loan debt as due by end-2025. For a borrower with a facility maturing in 2026, the refinancing calendar is a 2024 or early 2025 problem: the lead time for a properly run process is twelve to eighteen months. A recovering market is a better negotiating environment. Use it while the choice is yours.