Private Credit Sourcing Conference: Four key takeaways

DLA Piper’s Private Credit team sponsored the inaugural Private Credit Sourcing Conference in New York, where Partner Matt Schwartz (San Diego) and Partner Justin Hewett (New York, Houston) participated in multiple panel sessions.

The program brought together lenders, borrowers, and advisors for a technical agenda on origination, underwriting, and execution, alongside targeted networking opportunities.

Below, we highlight four key takeaways from the event.

1. Relationships remain a core advantage

Panelists emphasized that trusted relationships with management, founders, investors, and key board members are increasingly vital for access and successful outcomes in competitive processes. While pricing remains a factor, borrowers are prioritizing a lender’s track record, sector fluency, and collaborative approach. Credibility, effective communication, and an understanding of the business and challenges through diligence are key.

2. Speed matters, but precision wins closings

Private credit’s speed remains a competitive edge; however, speed without alignment to the business’s fundamentals may raise execution risk. Early consensus among parties on term sheet economics, which balance crucial lender protections with borrower priorities, may reduce the likelihood of future re-trading and improve borrower satisfaction. Early integration with legal counsel can help accelerate negotiations, limit documentation churn, and protect closing certainty.

3. Market dynamics: Covenant drift, structuring themes, and risk pricing

Amid heightened competition, covenant quality is softening, and some market entrants are underpricing risk. Covenant intensity is increasingly tailored to the borrower’s profile and durability. Unitranche structures remain prevalent, while delayed-draw term loans and net asset value (NAV) facilities are rising. Despite ample dry powder, high-quality deal flow is limited, and stress pockets and default risk are increasing as terms loosen and underwriting discipline varies.

4. Sector trends and opportunities

Dental service organization (DSO) roll-ups remain active yet structurally complex for lenders. Caution is warranted around enterprise resource planning (ERP)-heavy transformations, and selected technology exposures (eg, tech and fintech) continue to face funding volatility and capital scarcity. Merchant cash advance and revenue-based financing platforms are showing signs of strain. Trade and tariff dynamics are affecting industrial and capital-intensive businesses. Meanwhile, the private equity secondaries market is expanding as a liquidity outlet, supported by favorable market conditions, while general partners contend with muted distributions and lower distributions to paid-in capital (DPI).

Across the private credit lifecycle, artificial intelligence (AI) is shifting from a competitive edge to a baseline capability – accelerating deal screening, documentation workflows, continuous monitoring, and early-warning signals, while refining covenant analysis. Panelists cautioned that these benefits should be balanced with strong governance around model risk, confidentiality, and evolving regulation. Firms pursuing focused use cases with clear controls are realizing tangible gains in speed, consistency, and risk visibility.

Looking ahead

Deal flow and average transaction sizes remain robust, and private credit continues to attract growing market attention. Participants were broadly optimistic about near-term opportunities. Disciplined structuring, relationship strength, and execution certainty emerged as decisive differentiators in a competitive landscape.

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For more information, please contact the authors.