Petro: Banks, which dominate the ABL industry, have access to significantly more information technology, marketing programs, and financial software, all of which results in lower operating costs. Perer: Will consolidation be focused on any part of the market such as the small-ticket ABL groups? For independents who find themselves being pursued as an acquisition target, I suggest they consider their cost of funds going forward and the multiples being offered for their businesses. Winning transactions and building a portfolio rely more on the terms of a deal and the pricing. Now, these businesses rely on digital marketing. I believe that COVID-19 has diminished the personal relationship building and relationship maintenance. But what’s changed recently is the way those relationships are launched and serviced. Since ABL started in the 1970s, right through the pandemic, independent asset-based lenders and factors have relied on relationships to build their businesses. Petro: We are witnessing a sea change in terms of competition. What are you counseling them on right now? Perer: You have advised CEOs in commercial finance throughout the years. On the other hand, if the federal government does not have the ability to bail out lenders in the next downturn, then yes, there could be an increase in opportunistic acquisitions. In this environment, I don’t see the value of banks acquiring large-ticket independent ABLs. The economy has changed dramatically as a result of technology.Ĭompliance and bank underwriting standards have become significantly more demanding than they were 20 years ago. And non-banks have much greater access to those markets and to liquidity. Capital markets are much more efficient today. Petro: I don’t see many parallels at all with the markets of 20 years ago. Perer: Do you see any parallels to 20 years ago when the nation’s largest banks decided to be the consolidators of the largest independent ABLs? We want to see stable growth, increasing labor force participation, and declining inflation, but a positive outcome depends on an exponentially larger number of inputs that drive the economy. We really don’t know whether our political parties will be able to work together and help us return to a high-growth, enabling economy. I think we are living in an economic and political period that I would describe as chaotic. We had been in a stagnant period from 2010 until 2017, but that’s changed significantly. Those types of changes make it difficult to interpret where we are in the cycle or where we are headed. has changed significantly, from an industrial-driven to a technology-driven economy, while the federal government has used significant liquidity to bail out the economy-twice. A relatively predictable market cycle had existed post-World War II through the Great Recession. That provides borrowers of asset-based lenders with more liquidity and cash flow.Ĭharlie Perer: Where are we in this latest market cycle?Īndrea Petro: My view is that we don’t really have a market cycle any longer. Lower monthly payments are spread over the amortization period of the loan. Ready Capital focuses on owner-occupied real estate & M&E and provides term loans for significantly lower cost than non-bank real estate loans. The value-add to ABLs is enormous given most asset-based lenders are interested only in working capital loans for which assets turn quickly. Ready Capital is one of the largest non-bank SBA lenders in 7(a) loans and the company originated over $2 billion in PPP loans during the pandemic. Petro: I’m a board member at Ready Capital Corporation and a consultant to Waterfall Asset Management, advising on the underwriting and portfolio management of asset-based loans. In this installment of our series of executive interviews, Charlie Perer sits with Andrea Petro to talk about her new role as Board Member at Ready Capital, and to share her advice to ABL managers about consolidation, competition and the current state of the market.Ĭharlie Perer: What are you up to these days? Specifically, tell us about your role as a consultant to Waterfall Asset Management and Board Member at Ready Capital. Member Search: SFNet Annual Member Pricing.SFNet International Finance & Development Committee.Diversity, Equity and Inclusion Committee.SFNet Committee Articles, Data and News.Listing of State-by-State Financial Disclosures Legislation.SFNet Compendium of Secured Finance Law.Asset-Based Lending & Factoring Surveys.Impactful Leadership for High Potentials.SFNet Emerging Leaders Summit (YoPro Leadership Summit).SFNet's Women in Secured Finance Conference.SFNet's International Lending Conference.SFNet Hall of Fame – Lifetime Achievement Awards 2023.2nd Annual SFNet Cross-Border Finance Essay Contest.
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