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Sophisticated legal counsel for non-bank lending, mezzanine financing, and alternative credit solutions across the capital structure.
Private credit encompasses debt financing provided by non-bank lenders—including direct lending funds, credit funds, business development companies (BDCs), and family offices. These institutional investors offer customized credit solutions outside traditional banking channels.
Direct lending has emerged as a significant capital source for middle market companies, particularly in sponsor-backed transactions where speed, certainty, and flexibility are paramount. Documentation balances lender protections with borrower operational flexibility, often featuring one-stop or unitranche structures.
Credit agreements, security documents, and intercreditor arrangements for direct lending funds providing senior, unitranche, or junior capital.
Subordinated debt structures with equity features including warrants, options, or PIK interest components to enhance lender returns.
Single-lien term loans combining senior and subordinated debt characteristics, with internal payment priorities among capital providers.
Structuring debt investments for business development companies, ensuring compliance with 1940 Act requirements and portfolio company covenants.
Representing sponsors securing private credit for acquisitions, recapitalizations, or growth capital with emphasis on execution certainty.
Refinancing existing credit facilities with private credit solutions, managing lender transitions and covenant modifications.
First lien term loans provided by direct lending funds, typically with maintenance covenants, amortization, and yields reflecting middle market credit profiles. Often paired with small revolvers.
Junior debt with high-teen to low-twenty yields, featuring PIK toggles, minimal amortization, and equity kickers through warrants or options. Subordinated to senior facilities.
Unitranche structures providing entire debt package from single lender, streamlining documentation and eliminating intercreditor complexity. Popular in middle market sponsor transactions.
Combination of traditional bank revolvers with direct lending term loans, or layered private credit tranches with different risk-return profiles and payment priorities.
Our network has extensive experience with direct lending funds, BDCs, and alternative credit providers across the risk spectrum. We understand the evolving market standards for middle market credit agreements, the commercial drivers behind covenant negotiations, and the structural nuances of mezzanine and unitranche facilities.
Whether you're a direct lender deploying capital, a sponsor seeking financing certainty, or a borrower accessing non-bank credit markets, we bring specialized private credit expertise to maximize execution efficiency and protect your commercial objectives.
Private credit funds aren't subject to Basel capital requirements, can hold loans to maturity without mark-to-market volatility, and typically have more flexible underwriting parameters. This allows them to provide larger hold sizes (€50M-€500M+ per borrower vs. bank limits), higher leverage (6-7x vs. 4-5x for banks), longer tenors, and fewer covenant restrictions. Private credit funds also move faster—typical closing timelines of 4-6 weeks vs. 8-12 weeks for bank syndicates—and can provide certainty of execution that's valuable in competitive M&A processes.
Most private credit is provided through closed-end funds with 6-8 year investment periods plus 2-4 year liquidation periods. Funds typically target 10-14% net returns through a combination of cash interest (7-9% cash pay, 2-3% PIK) and success fees (warrants, equity strips, or co-investment rights). Fund documentation includes limited partnership agreements, side letters for key investors, subscription facilities for capital deployment, and management agreements. We advise both fund managers and institutional investors on formation, capital raising, and ongoing governance.
Direct lending (bilateral or club deals with 2-3 lenders) typically prices at 600-750 basis points over SOFR vs. 400-550 for syndicated institutional loans. This premium reflects illiquidity (no secondary market), concentration risk (larger hold sizes), and structural flexibility (bespoke covenants, amortization schedules). However, borrowers benefit from speed, certainty, flexibility on structure, and relationship-based underwriting that considers factors beyond strict financial metrics. Direct lending economics work for middle-market companies (€10M-€100M EBITDA) where syndication isn't efficient.
European private credit funds fall under AIFMD (Alternative Investment Fund Managers Directive), requiring authorization, capital requirements, and disclosure obligations. US funds must register as investment advisers unless exempt. Key considerations include leverage limits (varies by fund structure), investor suitability requirements (typically institutional or high-net-worth only), and ongoing reporting obligations. Loan origination may trigger licensing requirements in certain jurisdictions. We help structure funds to optimize regulatory treatment while maintaining operational flexibility.
Yes, private credit funds increasingly participate in syndicated facilities—either as anchor lenders providing large commitments or as investors in institutional tranches. This 'crossover' lending blurs traditional distinctions between syndicated and direct markets. Legal considerations include voting rights (pro rata vs. required lender thresholds), transfer restrictions (maintaining institutional investor requirements), pricing mechanics (benchmark rates plus credit spread), and intercreditor arrangements when funds hold both senior and junior positions.