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January 2004


Vol. 2 No. 1
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ABF Journal, January 2004
January 2004

Risk Management

Features

Risk Management… Identifying the “Core Critical” Issues
By David J. Kantes and Charles G. Johnson

All lenders want their transactions to have a very low risk of default and virtually no risk of loss. But how does one build a portfolio containing those lofty characteristics in today’s lending environment? The challenge remains to fully identify all the “core critical” risks in each new deal and to think a bit outside the customary approval matrix.(Ref # EXEC013)

Intellectual Capital: Understanding the Value and the Risk
By Weston Anson and Daryl Martin

As intellectual capital will continue to play a larger and larger role in all business deals in industrialized nations – lenders and other banking interests must learn to both understand the assets and understand how to finance them. The following article discusses how intellectual assets are the driver of value in most M&A activities today.

(Ref # CRD010)

The Dreaded “CEO” Trap
By Armand Lucarelli

Many loan officers aspire to be CEOs. Unfortunately, many loan officers also face the less appetizing CEO, “Career Ending Opportunity” when a credit goes bad due to fraud.This article is designed to describe some prudent steps that loan officers can take to avoid the feared CEO trap. (Ref # FRD005)

Real Estate In A Risk Management Environment
By Roger “Biff” Ruttenberg

Real estate involves, potentially, a high degree of risk to most businesses.This article addresses seven of these risk areas and how to deal with them to reduce, minimize or at least control some of the risks from real estate. (Ref # CRD012)

Trade Receivables & Credit Insurance… An Emerging Trend With a Strong Future
By Scott Pales

Trade receivables as an asset class are in an excellent position to grow over the next several years. As a result, many lenders have the opportunity to strengthen and solidify relationships with borrowers, and attract desirable new customers by becoming more competitive with the use of financing solutions incorporating trade credit insurance. (Ref # INS004)

Benchmarking Risk… Effectively Using Inventory Appraisals
By Byron Clark and Bob Morris

Loan portfolios must be managed – not just monitored – and the asset-based lender must be armed with the right tools to limit exposure. Therefore, third-party inventory appraisal is not just a first step in assessing risk; it is paramount in managing that risk. (Ref # APP014)

Reducing the Costs of Fraud
By Gerald M. Sherman

Mention fraud and most people think about Enron, WorldCom, Tyco and other major corporations but those aren’t typical examples. More often, business owners manipulate their reporting and otherwise engage in fraud as a last, desperate attempt to keep their businesses operating, and asset-based lenders are especially vulnerable. (Ref # APP014)

ABLs and SMEs… A Perfect Fit for $20 Million or Less
By Sam Philbrick

Now is a great time to be a small- to medium-size enterprise (SME) looking for financing as lenders are well capitalized and as new lenders and investors enter the fray. At the same time, through their ingenuity, product improvements and service developments, SMEs lay the foundation for myriad business opportunities for the ABL. (Ref # FRD006)

Is Your Appraiser Covering All The Bases?
By Craig Cappalli
One of the key components of any asset-based loan is the appraisal. The appraisal allows the asset-based lender to structure a loan facility that is properly supported by the under-lying assets of the borrower. If properly executed, the appraisal will also give the lender insight into the particular industry in general and the machinery and equipment in particular. (Ref # APP015)

Teamwork,Vigilance & Proactive Approach… Pathways to Sound Portfolio Management
By Jaudon C. Whitehead

Effective and successful portfolio management requires teamwork, vigilance and a pro-active methodology. A commitment to executing the basics from the inception can go far in smoothing out the inevitable rough spots and maximizing the long-term potential of ABL relationships. (Ref # CRD011)

Bank of America/Fleet Merger:

ABL Competitors Share Thoughts on the Marriage of the Behemoths

By Kevin Riordan

Recently, ABF Journal had the opportunity to interview six executives from asset-based lending institutions to get their perspective on what the merger of Bank of America and FleetBoston Financial will mean for the ABL industry and for banking in general.
(Ref # MERG001)
Columns

A PROFILE OF SUCCESS
A Passion for Lending
A Profile of Michael D. Sharkey, president and CEO of LaSalle Business Credit, Inc.

Through a series of strategic and fortuitous career moves, Mike Sharkey found himself at the helm of LaSalle Business Credit, Inc. before he turned 40. He now oversees an ABL backed by one of the world’s largest banks that can provide vast financial resources virtually around the globe.
(Ref # EXEC012)

LEGAL EYES
Living with Texas Usury Law: A Primer for Asset-Based Lenders
By Jeffrey D. Dunn

Usury laws are the oldest and most controversial of all laws affecting loans of money. Deeply rooted in public policy, these laws attempt to prevent lenders from making oppressive bargains with vulnerable borrowers by limiting interest to maximum statutory rates. This article examines how usury law impacts asset-based commercial loans governed by Texas law.
(Ref # LGL026)

PUTTING IT TOGETHER: ANATOMY OF ABL TRANSACTIONS
ABLs & Hilco: Fashioning New Strategic Relationships
By Richard Kaye

In partnering with Hilco, many asset-based lenders see far more than an asset disposition company. As illustrated in the in the CIT/Hilco deals with Cybex and Conbraco, they see a strategic partner with asset knowledge that can be applied in numerous ways to a singular end result: putting the deal together and getting it done.
(Ref # DLS010)

TURNAROUND CORNER
Loan Today, Gone Tomorrow?

Going Beyond Traditional Assessment Techniques
By William H. Henrich

As the great American poet Robert Frost reminds us, taking the road less traveled can make all the difference. The same can be said when it comes to managing the process of making corporate loans whereby lenders can move beyond traditional assessment techniques in an effort to improve loan quality.
(Ref # TM020)

FACTORING FOCUS
Factoring for Entrepreneurs:

Getting Past Revenue Roadblocks & Pitfalls
By Michael Semanco

Growing ventures need strategic direction and coaching to be successful at getting past the revenue roadblocks and pitfalls that come with business entrepreneurship. Factoring and other transactional based A/R financing can be ideal alternatives to traditional secured financing.
(Ref # FAC031)

If you have questions regarding ABF Journal content, call us at 800.708.9373 x128 or email jhoffman@abfjournal.com.