The overall scale of the middle market and tailwind of private equity (PE) sponsor transaction activity has created an ever-present need for middle market debt financing. But the middle market is vast, comprising companies that range from as small as $100 million to as large as $1 billion in enterprise value. By pursuing direct lending opportunities in the core middle market, investors may benefit from a fragmented opportunity set, a more favorable competitive environment, and attractive yields, among other potential advantages.
Here, we define the core middle market, describe the development of the market landscape, and identify essential ingredients for success when pursuing a direct lending strategy in the core middle market.
