Anna Schulze

• Small and medium-sized enterprises (SMEs) and mid-sized companies are vital contributors to the global economy, driving employment growth, fostering innovation, and enhancing international competiveness. However, in the aftermath of the Great Financial Crisis (GFC) and the collapse of the large finance company CIT Group, which provided 60% loans to US middle-market firms, banks reduced their lending activities. Thus, it became challenging for firms to obtain long-term loans. The financing gap has increased further due to high interest rates, the COVID-19 pandemic, the unstable situation in the real estate market as well as higher costs due to the adoption of digital infrastructure and sustainability goals. Therefore, the search for alternative financing solutions outside bank lending and public markets became unavoidable for SMEs and mid-sized companies. Private debt funds entered the market, and, since the GFC, they have played a crucial role in offering alternative financing for firms globally. Private debt fund managers raise capital commitments through closed-end funds (like private equity) and make senior loans (like banks) directly to, mostly, middlemarket firms. The private debt market has experienced rapid growth in recent decades. The private debt funds assets under management (AuM) increased by 380% from 2008 to 2022, reaching $1.5 trillion AuM in 2022 . The high growth of private debt shows great interest from investors in this alternative asset class and lucrative investment opportunities. Despite its substantial and growing size, the private debt market is relatively understudied. This dissertation introduces private debt as an important alternative financing source, provides an overview of private debt strategies, seniority, and structure, discusses the legal considerations concerning private debt, and briefly compares the two most mature private debt markets: Europe and the U.S. Moreover, it assesses the size of the European private debt market and compares its development in different European regions. Furthermore, it examines in detail the business model of private debt funds based on a survey of 191 European and U.S. private debt managers with private debt assets under management of over $390 billion. Finally, it delves deeper into the relationship between private debt and private equity funds and their role in buyouts. To sum up, this dissertation provides a basis and inspiration for future research to expand upon and dive deeper into the world of private debt funds, their business model, and their impact on portfolio companies and the economy as a whole.