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| July 7, 2000 Amembal Joins the Fray/ Reaction to Bob Rodi's Internet Observations Amembal Capital Joins the Internet Leasing Fray---launches www.lesseeadvisor.com full story at bottom ****1 Hal Hayden to Bob Rodi to John Kruse and Tavis Foxx John Kruse: I could not agree with you more Bob. The frustrating part for us (www.CapitalStream.com) has been that we have been thrown into the pile of "internet leasing companies" with an assumption that we are offering a similar type of model to Leaseexchange, when we are not. If you remember at the UAEL in SF this year, you were in that room full of people and quickly found out that the internet companies that supported an 'auction' scenario, were very different from internet companies, such as CapitalStream, that were offering a e-commerce 'tool' to better automate existing relationships and to also create new ones. This is the main reason that Bob Fisher was on the panel so that he could help the ease some of the confusion that has been surrounding this whole e-commerce issue. It has been a long process educating the market as to the differences in these systems and what they offer. I also agree with Hal regarding the issue of 'fixing' an industry that has been broken. We certainly did not develop the CapitalStream.com system to 'fix' a broken industry. It was developed to strengthen existing relationships and create new ones by offering faster turnaround and better communication. I would question a marketing message from anyone that touts their system 'fixes' an entire industry that has been extremely successful in the past, and will continue to be.
John Kruse Contact
information: Travis Foxx I wanted to respond to Bob's comments. We are all working hard to understand how the "internet model" is going to affect our lives as brokers and lessors. While we shouldn't take a "doom and gloom" viewpoint, we do have to be prepared to face whatever challenges these changes bring. I think it is still early in the game, and I think it's going to get tougher on us. I believe the following things are true: 1) Customers/End Users will become more comfortable with the idea of acquiring things and applying for things over the net. We are all receiving and beginning to accept less customer service in many areas. The banks are a great example. As the big players provide automated services, and pass on the lower costs that automation brings, consumers will continue to accept less personal service in exchange for better pricing and convenience. Bob is correct - the .com's are struggling with the customer service issue. Figures show that 70% of "shopping baskets" are abandoned before the purchase is completed. But they are addressing this, and are starting to provide live (by phone or by "chat")interfaces, to answer the customer's questions. The number of sales completed triples when this is added. They will continue to work on this. 2) It will be easy enough for the .com's to weed out applicants with low time in business, small dollar amounts, poor equipment, etc... And if the system gets 100,000 aps a day, it isn't a big deal like it was when everything had to be done by hand. Fraud will be harder to detect and prevent, but I am convinced there are ways to deal with that, and I don't think it will take long. 3) Yes - the .com's will have to differentiate themselves. As in any market segment, there will be too many players, and there will be consolidation and fallout. The Wall St. Journal had a piece just yesterday on the pet___.com players, and how there will shortly be only a couple of players. There just isn't a need for more than that. The leasing business will be the same - there will be some "Gateways" and Dells" that have the horsepower to build a brand, provide the cutting edge technology, and process the "typical" application. That's the kind of speed and response the vendors are going to expect. When the application isn't typical (Time in Business, Used Equipment, Private Party Sale, etc...) the customer will have to go elsewhere. The broker (or better yet - closely held lessor) then has a chance to manage the risk and get a fair return on it. The broker has a bigger challenge because he must find a funding source that agrees with his reasons why the deal should be done. What will be interesting to see is how much fallout there is among the ap-only, $ 75K funding sources, who are continuing to tighten their credit window and become more alike. I heard them say they don't support the commoditization of the small ticket market too, but the reality is that if the end-users support it, they won't have a choice. If we all saw First Sierra coming - what about Nationsbank? or Commerce Security? or any of the others? How long before GECAP/CPLC offers a direct product? How many of the smaller $75K sources will be able to adapt to the "story credit" deals in order to gain a competitive edge? Will anyone address that niche effectively besides Fin Pac? I still find a comparison in the travel agent model - I don't need them to book a quick flight to San Francisco, but if I want to spend 3 weeks touring Europe, they provide a value added that I need and want. Brokers will have to continue to bring more value added. One of our approaches has been to provide different types of products and services, and generating more fee income. We are working to become more of a consultant and expert on businesses and their debt structure. Last year 12.5% of our volume was from fee income (up from 7% the year before). Currently it is over 23% of this year's business, and I see it increasing, as we try to get more business out of an existing customer relationship. Regardless of how old Aaron Ross was when Bob and I and Hal started in the leasing business, his end of the business is a force to be reckoned with. The part of the business that can be made more efficient will be. The tricky stuff - the deals that take more expertise, more knowledge, and more risk, can't be automated. I wonder how much room there will be in-between? I just had to stir things up a little more... Happy Friday!
Travis Foxx
Merchant Capital Need financing for your growing business? Merchant Capital - "Financing for Entrepreneurs" http://www.merchantcapital.net Travis
Foxx
****1 www.lesseeadvisor.com formed by Amembal Capital as web portal Amembal Capital (ACC) today announced the formation of a new division, Lessee Advisory Group and a supporting web-site lesseeadvisor.com. ACC is a diversified middle-market financial services company that specializes in the structuring, origination, servicing, and syndication of a broad array of lease products to the US middle market. ACC is led by "industry icon," ( that's what the press release said-) Sudhir P.Amembal, who has overseen the training of 50,000 lease professionals in over 35 countries and authored 14 leasing publications, including the industry bestseller, The Handbook of Equipment Leasing, and industry veteran, Loni L. Lowder, who has over 20 years of experience in providing competitive leasing solutions to a variety of leasing customers. Phillip Nichols, managing director of the company's corporate advisory group has been instrumental in launching this new division and will also act as its managing director. Key members of the advisory team include Jim Woods, director of syndication, Randy Cameron, executive vice president, Loni Lowder, president and CEO, and Sudhir Amembal, chairman. Services provided include analysis of financial impact, documentation review, negotiation, and follow-up through closing, debt and lease structure and placement for the capital needs of middle- market clients, restructuring of existing debt or leases, review and management of existing leases, negotiation of bank lines, residual negotiation, development and implementation of private label vendor programs and captive leasing programs.
For further information and a detailed brochure outlining specific services
offered, please contact Randy S. Cameron, executive vice president,
Amembal Capital, 420 East South Temple, Suite #240, Salt Lake City,
Utah, USA, 84111, telephone (801) 595-0009 ext. 444, or (800) 409-5008,
email: rcameron@amembalcapital.com. www.leasingnews.org
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