This week we continue our conversation with members of Lincoln International’s Capital Advisory Group, managing directors, Aude Doyen, Xenia Sarri, and Dominik Spanier.

“US and Europe are competing markets,” Ms. Sarri told us. “The US was increasingly aggressive when I first came here, but six years later terms are more favorable in Europe. For instance, there are no baskets around restricted payments. Also, we’ve seen covenant holidays lasting nine months or longer. No excess cash flow sweeps, no amortization and tighter flex language.

“Covenant head room is now 35%, having widened, with probably 30% with the banks. For direct lending cov-lite, it’s less about size than having a reason to do so, such as volatile Ebitda. You can certainly find someone to do it for smaller borrowers, but it’s expensive. For $30 million Ebitda and below, you usually need at least one covenant.