The strongest unitranche year since 2021

European mid-cap unitranche closed 2025 with 570 transactions, the strongest annual total since the 2021 record of 486. The UK led the year-end surge, with deal volumes up roughly 60% in Q4 alone, and debt funds held 71% of all UK mid-cap financings across the full year. For a borrower the volume matters less than what it implies about lender competition at the lower end of the market.

This is the desk’s annual read on European private-debt deal flow, drawing on the Deloitte Private Debt Deal Tracker and the Houlihan Lokey MidCapMonitor, the two most consistently cited public surveys of the market. Neither is a census; both are surveys of leading market participants, and both are biased toward the sponsored mid-cap end of the market. Below the PE-sponsor line, where most of our clients sit, the picture is directionally the same but the absolute numbers do not capture it fully. We read these as leading indicators of appetite, not as a count of every deal done.

What drove the 2025 recovery?

The prior year’s context matters. The 2023 trough, driven by the rate shock and a near-standstill in leveraged-buyout activity, pushed European quarterly unitranche as low as 62 deals in Q2 2023. The recovery off that trough was sharp: Q3 2023 came back at 96 (+55% QoQ) and the rebound carried through 2024. By 2025, the market had absorbed the higher-rate normal and deal flow re-accelerated, with each quarter building on the last.

Two features of the annual series stand out. First, 2025 surpassed 2021 despite a base rate more than five percentage points higher than the 2021 average; the bid for mid-market credit is structural, not a function of the cheap-money era. Second, the recovery from the 2023 trough was faster than many practitioners expected. Capital that was raised during 2022–23 needed to deploy, and deployment pressure accelerated the reopening of the market.

Is unitranche still the UK default structure?

The Deloitte tracker has measured UK unitranche penetration across eleven consecutive editions from Spring 2020 through Autumn 2025. The range is 58% to 70%, with a slight drift down from the 2021 peak (70%) to the most recent reading (59%). No edition has dropped below 58%. Across the same period, the European average has run consistently ten to fifteen percentage points below the UK, reflecting the stronger banking presence that continental markets, particularly France and Spain, have retained in mid-cap lending.

The slight moderation in the most recent reading (59% at Autumn 2025, versus 66% at Spring 2025) sits within the normal edition-to-edition variation in the series rather than marking a trend reversal. The structural point stands: for a UK mid-market borrower raising debt for an acquisition or refinancing a maturing facility, unitranche is the modal structure. Subordinated and mezzanine tranches persist at the margin, and senior bank facilities remain competitive for the cleanest credits, but the single-tranche private-credit structure dominates the field.

The Deloitte tracker measures lender-reported deal structures across survey participants, not the full universe of UK mid-market transactions. Non-sponsored corporate borrowings below the sponsor line are under-represented. The penetration figures are therefore a ceiling on what is observable, not a floor on what is available.

Who is winning the UK mid-cap book, and what does it mean for terms?

The Houlihan Lokey data captures the balance between debt funds and banks at the UK transaction level. Debt funds have held above 60% of UK mid-cap financings in every measured period across 2023–25, reaching 77% in the first half of 2024 before settling to 71% for the 2025 full year. Continental banks held on to more: French banks ran at above 50% of French mid-cap transactions for most of 2023 and into 2024. The UK market is unambiguously debt-fund led.

The practical consequence for a borrower is this: the UK mid-cap lender field is not evenly split between banks and funds. A process that canvasses only banks is searching the minority share of the supply. The debt funds that dominate the UK book compete with each other for good credits, and that competition is where the spread on terms is widest. A borrower who invites only banks and one or two funds into a process is systematically under-soliciting the market.

None of which should be read as a case against bank lenders per se. For a cash-generative credit at the lower end of the market, the right bank can still win on price and covenant flexibility, and we say so when the data supports it. The argument is narrower: you cannot know a bank is the right answer until you have put the funds in the room, and the deal count says the funds will be most of the room.