Europe had its sights firmly fixed on accelerating away from the pandemic in 2021. Borrowers looked to deliver robust recovery plans to build lender confidence and debt market activity was buoyant, with deal volume in 2021 up 99% on 2020, driven by strong M&A activity. In 2022, the conflict in Ukraine is likely to impact European debt market activity, but the severity of this is not yet clear.

ESG continued to become a dominant theme in 2021, with environmental, social and governance metrics becoming intrinsically linked to debt terms and business valuations. Lenders and borrowers are still building out methodologies to confidently and consistently articulate the true impact of ESG, and we expect this to become more refined in 2022.

The latest edition of AlixPartners' bi-annual Mid-Market Debt Report covers more than 100 bank and non-bank lenders active in the UK and European mid-market (debt transactions valued up to €300 million).


  • In H2 2021, as Europe passed through what we hope to be the final throes of the pandemic, activity levels were buoyant as leveraged finance deals reported 6% higher than H1 2021. Lending associated with M&A activity increased by 81% between 2020 and 2021, consistent with the global increase in M&A activity of 64%.

  • Since the outbreak of COVID-19, 68% of credit fund deals have focused in sectors that have proved resilient to the impacts of the pandemic, including TMT, healthcare, financial and business services. We now see credit funds seeking to find a less crowded part of the market through diversification: by sector, geography, quantum, in sponsorless transactions, and by participating in equity.
  • It has been estimated that ESG-linked investments globally totalled $6.1tn at the end of 2021, yet measurement remains challenging due to the bespoke nature per company and the reduced tangibility of some measures.
  • Lenders are now challenging businesses’ recovery plans, and borrowers are focusing on restoring their financial position, leaving no stone unturned to boost cash flow generation: value proposition, pricing strategy, costs, capex and working capital are all under the microscope.

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