Borrowers choose premium-priced private credit not just for speed and certainty, but for tangible value-added services. Blackstone offers portfolio-wide cross-selling, operational cost reduction support, and cybersecurity assessments, creating over $5 billion in enterprise value for its credit portfolio companies.

Unlike equity investors hunting for uncapped upside, debt lenders have a fixed return and are intolerant to losing principal. This forces them to be paranoid about downside risk and worst-case scenarios. Their diligence process is often more thorough and thoughtful, providing a different and rigorous lens on the business.

While the US private credit market is saturated, Europe's middle-market offers higher spreads (north of 600 basis points) and lower leverage. This opportunity is most pronounced in non-sponsor deals, a segment where large banks and public markets are less active, creating a lucrative niche.

The greatest systemic threat from the booming private credit market isn't excessive leverage but its heavy concentration in technology companies. A significant drop in tech enterprise value multiples could trigger a widespread event, as tech constitutes roughly half of private credit portfolios.

Contrary to fears of a frothy market, current M&A and LBO activity is more conservative than the 2007 era. A key difference is that today's deals involve a substantially higher amount of equity contribution from buyers, making them structurally less risky than those seen before the financial crisis.

Contrary to the narrative that PE firms create leaner, more efficient companies, the data reveals a starkly different reality. The debt-loading and cost-cutting tactics inherent in the PE model dramatically increase a portfolio company's risk of failure.

Public markets favor asset-light models, creating a void for capital-intensive businesses. Private credit fills this gap with an "asset capture" model where they either receive high returns or seize valuable underlying assets upon default, securing a win either way.

To generate returns on a $10B acquisition, a PE firm needs a $25B exit, which often means an IPO. They must underwrite this IPO at a discount to public comps, despite having paid a 30% premium to acquire the company, creating a significant initial value gap to overcome from day one.

As a Limited Partner (LP) in the same PE funds they lend alongside, Neuberger accesses direct, unvarnished reporting on a portfolio company's performance. This provides a more honest view of a business compared to the polished materials prepared by a sell-side investment bank during a sale process.