Comparisons with past events like the Great Recession fall short in describing what equipment finance businesses in the US are experiencing as a result of the COVID-19 pandemic. To provide reliable insights and advice to the industry, consultants with The Alta Group recently developed an article for Equipment Finance Advisor that discusses initial impacts as well as short term and longer term implications.
The article acknowledges that equipment finance portfolio restructurings are underway, estimated at 25-30%, but the situation is fluid. In fact, there may be more restructurings than even anticipated.
Equipment manufacturers and their innovative financing partners are stepping up to the challenge. The consultants advise all captives to keep their manufacturing parents close so they can anticipate shortages and pricing changes.
Alta consultants who contributed to the article also focused on developments in the fintech sector, including negative fallout but also two business models poised for growth. They described current constraints on mergers and acquisitions; future M&A opportunities; fluctuating equipment valuations and other asset management implications, such as the increased propensity for customers to renew at end of term; and the information technology requirements of remote work.
Additional advice in the article includes a reminder to reach out to customers proactively and spread goodwill as much as possible, but to do so with an objective action plan in place. The consultants also recommend stepping up due diligence and cybersecurity efforts to combat bad actors taking advantage of the situation; and, longer term, supporting pandemic-friendly equipment such as robots, cobots and drones, as well as usage-based flexible payment models – already a trend in the industry – to help businesses through difficult times.
We invite you to read the full article here featuring the insights and recommendations of Valerie L. Gerard, James Jackson, Carl Chrappa, Paul Bent, David Wiener, Diane Croessmann, Andrew Mesches, John Hurt and Patricia Voorhees.