Lenders have been forced to become more flexible with loan requirements as their competition remains intense, with an abundance of debt capital and few completed deals. This has led to the resurgence of covenant-lite loans, which experts say are more prevalent in the upper middle market than they were in pre-recession 2007- the last time lenders frequently used the structure.(See related graphic.) Watch related video below, or click here.
So far in 2014, dealmakers have indicated an increase in early-stage deal flow, which could lead to an increase in completed deal flow. But following a few years of sparse middle market M&A, deal investors are still having a hard time finding places to put their money.