More financial institutions are establishing business development companies (BDCs), which will likely lead to increased M&A activity as money for acquisitions is available even to small middle-market firms.

Middle market M&A was down in 2013 for the second year, but BDCs should help that volume recover. BDCs should become a meaningful factor in lending because there are more of them and they've gained significantly more assets. By one estimate, today there are 43 traded and 11 non-traded BDCs representing $56.5 billion in assets. In 2000, there were just three BDCS with combined assets of $2.2 billion.

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