Revisiting Private Credit and AI with Matt Plooster

Matt Plooster returns to the podcast to deliver a timely update on private credit and specifically its deployment in the lower middle market. 

Despite lingering gaps in awareness and education among business owners and professional advisors, the overall picture is bullish on private credit’s continued growth and deployment. The bearish private credit headlines in the WSJ and Bloomberg aren’t representative of lower middle market activity. AI and private credit in software have undergone a full re-rating. Software no longer gets its own software-centric ARR oriented underwriting framework.  It’s back to cash flow and EBITDA.  

Matt and Peter examine how non-dilutive capital is being used to solve shareholder liquidity issues, fund growth, and support acquisition strategies for Main Street businesses. They also cover the current bifurcation in the private credit market, why software underwriting has shifted materially in the AI era, and why industrial and infrastructure-related sectors continue attracting significant private credit dollars. 

The conversation closes with a broader discussion that is closer to home for Matt regarding AI’s impact on the investment banking industry, the deal process, and how it’s impacting investment banking hiring and diligence processes. Again, listeners will hear some surprising answers that fly in the face of the mainstream media’s generally gloomy AI narrative.   

Discussion Points:

• The continued education gap around private credit in the lower middle market
• How private credit helps solve shareholder liquidity and succession issues
• Why today’s LMM credit environment is more borrower-friendly than headlines suggest
• The role of non-dilutive capital in growth and acquisition financing
• How software underwriting standards have shifted in the AI era
• The growing importance of defensible EBITDA and cash flow generation
• Why industrials, infrastructure, and data center-related sectors remain attractive
• Strategic buyers versus private equity buyers in today’s M&A market
• The impact of AI on investment banking workflows and diligence
• How AI is reshaping analyst hiring and talent evaluation
• The future of white-collar work and AI adoption inside professional services firms
• Why clean financial data is becoming even more important in transactions
• How younger professionals are approaching careers with greater intentionality and purpose

Masters in Small Business M&A (sign up for podcast drops here) is produced by its host Peter Lehrman and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.

If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market inv...