Private credit has rapidly evolved from a niche asset class into one of the most influential financing forces in global dealmaking. As we head into 2026, its rise is no longer a side story it’s central to how mergers and acquisitions are being structured, funded, and executed across markets. With traditional bank lending constrained, interest rate volatility reshaping capital decisions, and private equity firms facing pressure to deploy record levels of dry powder, private credit has become the go-to solution for dealmakers who need speed, flexibility, and certainty.
Over the past decade, private credit has grown into a multi-trillion-dollar asset class, with institutional investors increasingly allocating capital toward private lending strategies due to attractive yields and downside protection. This surge of available capital has transformed the dynamics of deal finance. Instead of relying on bank syndicates or broadly marketed debt, buyers are turning to private credit funds that can underwrite tailored structures, often within days, not weeks. This shift has dramatically increased the speed of dealmaking, especially in competitive sales processes.
One of the biggest shifts heading into 2026 is how private credit is changing the way deals are financed and valued. Private lenders can offer flexible structures, like unitranche loans, higher levels of leverage, and custom terms, that traditional banks often can’t match. This gives buyers more room to fund acquisitions that might not have been possible under stricter bank rules. For private equity firms, it means they can move faster in competitive processes and put forward stronger offers for attractive businesses. For corporate buyers, it opens the door to deals in sectors where their own balance sheets may have limited them in the past.
Another major development is the rise of private credit in large-cap and even mega-cap deals. What was once a middle-market tool is now frequently used in multibillion-dollar transactions. Leading private credit providers, including direct lending arms of major asset managers and sovereign wealth–backed lenders, are increasingly willing to write $1–5B tickets. This trend not only expands the spectrum of deals that can be financed privately but also intensifies competition with traditional capital markets desks. As a result, banks are being forced to rethink their underwriting models and fee structures to remain competitive.
For sellers and management teams, private credit brings a degree of certainty that is particularly valuable in volatile markets. The ability to lock in committed financing from a single or small group of lenders reduces execution risk and makes it easier to stand behind an offer. In cross-border transactions, private credit also offers greater flexibility around jurisdiction, collateral packages, and documentation — crucial for global buyers navigating regulatory complexity.
However, the rapid rise of private credit is not without risk. Higher leverage and covenant-light structures may amplify stress in lower-performing assets, especially if global growth softens. At the same time, private credit funds are increasingly competing with one another, driving some to stretch on terms, underwriting assumptions, or pricing. For borrowers, this competition is positive — but for lenders and investors, it increases the importance of selectivity and disciplined underwriting.
Looking ahead to 2026, private credit appears poised to play an even more dominant role in M&A. With more institutional capital flowing into the strategy, further bank retrenchment in certain sectors, and PE firms pursuing creative deal structures like continuation funds and minority recaps, private credit will increasingly shape what deals get done, how fast they close, and how value is created post-transaction. The line between credit investor and equity partner is also blurring, with many private credit funds exploring hybrid capital, structured equity, and preferred instruments that sit between debt and equity.
Ultimately, the rise of private credit signals a fundamental evolution in the global dealmaking ecosystem. It empowers buyers with speed and flexibility, gives sellers more certainty of execution, and provides investors with attractive risk-adjusted returns in an environment of shifting monetary policy. For M&A and private equity professionals, understanding how to navigate and leverage, this new credit landscape will be a defining competitive advantage in the years ahead.