By Paul Spearing, Managing Director, First Bank Sponsor Finance
Originally published in the St. Louis Business Journal on July 11, 2025.
As 2025 reaches its midpoint, Paul Spearing, Managing Director at First Bank Sponsor Finance, draws on recent interactions with private equity firms and portfolio companies to provide a candid assessment of the current M&A landscape and broader economic trends. Spearing offers his perspective in the following Q&A.
Q. Can you provide an introduction of First Bank Sponsor Finance?
A. At First Bank Sponsor Finance, we partner with private equity funds acquiring lower middle market businesses, often ranging from $2 million to $10 million in EBITDA. Typical target industries include manufacturing, distribution, and services.
We provide acquisition financing to support the initial buyout but can also support all phases of the investment lifecycle across a variety of lending facilities. We pair our debt offerings with First Bank’s full suite of banking services.
Q. Looking back on the first half of 2025, what trends have surprised you?
A. The impact of trade tensions has been interesting. Our average borrower continues to exhibit financial resilience. However, we are seeing a decrease or cancellation of significant investments.
Fortunately, the C-suite remains confident in their ability to navigate the turbulence. Based on conversations with clients, the timing of any trade resolution is as important as the outcome.
Q. What common perspectives have you observed among your private equity clients related to the current macro environment and its impact on the lower middle market?
A. There’s caution given how difficult it is to assess a business when there’s such uncertainty related to trade. High quality companies and those with more trade insulated businesses are continuing to attract interest. Sponsors are sometimes making it to the final round and seeing their offers fall short. We think the tighter supply will continue to drive competitive conditions. Lending isn’t immune from this dynamic either.
Q. What impact has the trade environment had on deal activity?
A. Our team has observed a decline in companies initiating sale processes; however, those at more advanced stages of a sale process are staying the course.
Some buyers have exited or are being more selective in their acquisition strategy. We’ve also seen instances where a sale has been paused, but typically this is where there’s a more acute impact from the trade situation.
Q. What steps are you seeing clients take to mitigate the impact?
A. We’re seeing a range of strategies including price increases, pivots to less tariff-sensitive countries, and opportunistic inventory purchasing. Before the pause of the reciprocal tariffs, we saw clients canceling overseas purchases that were subject to high tariff rates. Businesses are also pursuing collaborative tactics with their suppliers, while assessing changes that would reduce overall costs.
Interestingly, while there can be an “us versus them” perception, our perspective from conversations with clients is that international suppliers are making efforts to find ways to mitigate impacts.
Q. Have you adjusted your approach to risk assessment?
A. At First Bank Sponsor Finance, we strive to remain consistent in our approach despite what may be causing turbulence. Providing consistency when others are not able allows us to build relationships. While fine details are important, we focus on the people with whom we are partnering. If you’re working with a trusted partner and there is mutual trust, the outcomes are often positive for all.
As a privately owned bank for over 100 years, we deliver consistency through a local, flat organizational structure and long-term mindset.
Q. What factor do you think will influence M&A for the rest of 2025?
A. Although I wish I had a more unique perspective, my answer is the obvious one. Resolution of the current trade impasse in a favorable manner will be the most influential driver. Unfortunately, I think there will be a negative impact for the year. We’re halfway through 2025 and my presumption is the situation will continue to linger. This may drive competitive conditions for attractive opportunities for acquirers and lenders alike.
If you wish to strategize with a knowledgeable partner, contact a trusted advisor with First Bank Sponsor Finance.
Originally published in the St. Louis Business Journal on July 11, 2025.
As 2025 reaches its midpoint, Paul Spearing, Managing Director at First Bank Sponsor Finance, draws on recent interactions with private equity firms and portfolio companies to provide a candid assessment of the current M&A landscape and broader economic trends. Spearing offers his perspective in the following Q&A.
Q. Can you provide an introduction of First Bank Sponsor Finance?
A. At First Bank Sponsor Finance, we partner with private equity funds acquiring lower middle market businesses, often ranging from $2 million to $10 million in EBITDA. Typical target industries include manufacturing, distribution, and services.
We provide acquisition financing to support the initial buyout but can also support all phases of the investment lifecycle across a variety of lending facilities. We pair our debt offerings with First Bank’s full suite of banking services.
Q. Looking back on the first half of 2025, what trends have surprised you?
A. The impact of trade tensions has been interesting. Our average borrower continues to exhibit financial resilience. However, we are seeing a decrease or cancellation of significant investments.
Fortunately, the C-suite remains confident in their ability to navigate the turbulence. Based on conversations with clients, the timing of any trade resolution is as important as the outcome.
Q. What common perspectives have you observed among your private equity clients related to the current macro environment and its impact on the lower middle market?
A. There’s caution given how difficult it is to assess a business when there’s such uncertainty related to trade. High quality companies and those with more trade insulated businesses are continuing to attract interest. Sponsors are sometimes making it to the final round and seeing their offers fall short. We think the tighter supply will continue to drive competitive conditions. Lending isn’t immune from this dynamic either.
Q. What impact has the trade environment had on deal activity?
A. Our team has observed a decline in companies initiating sale processes; however, those at more advanced stages of a sale process are staying the course.
Some buyers have exited or are being more selective in their acquisition strategy. We’ve also seen instances where a sale has been paused, but typically this is where there’s a more acute impact from the trade situation.
Q. What steps are you seeing clients take to mitigate the impact?
A. We’re seeing a range of strategies including price increases, pivots to less tariff-sensitive countries, and opportunistic inventory purchasing. Before the pause of the reciprocal tariffs, we saw clients canceling overseas purchases that were subject to high tariff rates. Businesses are also pursuing collaborative tactics with their suppliers, while assessing changes that would reduce overall costs.
Interestingly, while there can be an “us versus them” perception, our perspective from conversations with clients is that international suppliers are making efforts to find ways to mitigate impacts.
Q. Have you adjusted your approach to risk assessment?
A. At First Bank Sponsor Finance, we strive to remain consistent in our approach despite what may be causing turbulence. Providing consistency when others are not able allows us to build relationships. While fine details are important, we focus on the people with whom we are partnering. If you’re working with a trusted partner and there is mutual trust, the outcomes are often positive for all.
As a privately owned bank for over 100 years, we deliver consistency through a local, flat organizational structure and long-term mindset.
Q. What factor do you think will influence M&A for the rest of 2025?
A. Although I wish I had a more unique perspective, my answer is the obvious one. Resolution of the current trade impasse in a favorable manner will be the most influential driver. Unfortunately, I think there will be a negative impact for the year. We’re halfway through 2025 and my presumption is the situation will continue to linger. This may drive competitive conditions for attractive opportunities for acquirers and lenders alike.
If you wish to strategize with a knowledgeable partner, contact a trusted advisor with First Bank Sponsor Finance.
Paul Spearing
Managing Director, First Bank Sponsor Finance
(314) 995-8790
[email protected]
Paul Spearing possesses 15 years of commercial lending experience, joining First Bank in 2017. In his current capacity, Paul leads the Sponsor Finance group, First Bank’s specialty lending division dedicated to private equity owned businesses. He holds a BSBA from the University of Missouri.