It may not seem like Rob Miller has much in common with LeBron James. Miller cannot snatch a rebound out of the sky, hurdle down the court in a few steps and slam the ball through the rim with electrifying force in the NBA Finals, just as James cannot perform an in-depth credit analysis while utilizing knowledge of cash flow and collateral to broker deals with companies that may not have traditional assets. Unless both James and Miller have hidden skills the world doesn’t know about.
However, the two do have one thing in common: they both returned to their roots this year.
James re-signed with the Cleveland Cavaliers last summer and, at the end of March, Miller returned to Rosenthal & Rosenthal, a privately owned factoring and finance company in New York, to head up the firm’s asset based lending unit.
“I maintained relationships with some of the people that I worked with here at Rosenthal and I left on good terms,” says Miller. “Obviously I did something right, and last summer I was approached to take over the group again and after negotiations and timing, here I am back 14 years later.”
The Come Back
The 14 years following his first run with Rosenthal & Rosenthal still make up less than half of Miller’s experience in the financial services industry, but it is the most recent history that may serve him best in his new role. After his two years with Rosenthal & Rosenthal, Miller worked with GE Capital in its Business Credit Group, a position that essentially became a workout job, before joining Webster Bank as a senior vice president in the private equity cash flow group. Furthering the James parallel, GE Capital could be looked at as Miller’s Miami Heat.
Miller has fond memories of his time with GE Capital, and for good reason, as he had great success in his role with the financial juggernaut.
One example was a $100 million deal with a construction company in North Carolina, with senior debt of $25 million and mezzanine debt of about $15 million. GE Capital was the agent of a four member bank group and Miller was the point person on the deal. With the assistance of a turnaround consultant and the cooperation of the construction company, Miller was able to successfully wind down the 30 jobs that the construction company was in various stages of completing and ultimately auction off 600 pieces of construction equipment, with the senior lenders receiving almost 100% of the principal.
In total, Miller says that he liquated somewhere around a dozen companies during his time with GE Capital.
Rosenthal & Rosenthal is a much smaller company than GE Capital, but Miller still feels there are plenty of lessons he learned with the industry giant that will help him grow the asset based lending division of Rosenthal & Rosenthal.
“[GE Capital] is a large organization, but what the size brings is a diversity of deals,” Miller says. “I got exposed to hundreds of millions of dollars in credit. That type of exposure and experience you can’t get in a lot of different places.
“That experience, combined with the diversity of deals and network of other lenders we sponsored, such as law firms and consulting firms, added to my base knowledge, and I bring all of that to Rosenthal,” Miller added, while expressing excitement about one of Rosenthal’s major advantages: a lack of corporate overhead and bureaucracy.
It is that allure of being privately owned that was one of the driving forces on both ends that brought Miller back to Rosenthal & Rosenthal.
“The reason I came back was manifold my prior work experience here, which was very favorable, and the ability to go back to a privately owned, non-regulated, self-financed company and be able to grow it in a fashion where I don’t have to worry about quarterly earnings and disclosures with analysts or that sort of thing,” says Miller. “We can grow at our own pace; I have a blank piece of paper to take this to the next level.”
The Next Level
In his first 90 days with Rosenthal & Rosenthal, Miller’s main focus was assessing the portfolio of the company. Miller said he went through and physically reviewed half of the exposures and about 80% of the portfolio in dollars, and came away entirely pleased with the quality of the underwriting.
What he has been working on since, and will continue to put an emphasis on into the future, is increasing the quality of credit analysis by his team to ensure effective lending, even at higher risks, and to compliment the history of durable credit and collateral at Rosenthal & Rosenthal.
“We’re a high risk lender. We’re not a bank so our cost of capital is higher than a bank,” says Miller. “We have to charge more than a bank so accordingly our risk is higher. We’re not afraid of that. The company’s been around since 1938, so clearly it has a strong credit and a very strong collateral culture.”
Of course, Miller has not pigeonholed himself and has plenty of other tasks and goals on the agenda in the coming months and years.
A major one of those sounds simple. He, along with other senior staff members, is very interested in increasing the brand awareness of Rosenthal & Rosenthal’s asset based lending operation. Miller is well aware that Rosenthal & Rosenthal is best known for factoring, but he hopes to bring more attention to his unit and, in turn, grow an already solid business to even greater heights. Miller says that Rosenthal is going through a new strategy, with a revamped marketing program and website to reimage the entire brand.
“One of the things that we’re exploring is how do we get our story out to a wider audience. How can we use social media to more effectively do that? The world is certainly headed in that direction,” says Peter Rosenthal, president of Rosenthal & Rosenthal. “We have our traditional channels that we utilize to develop the business, but as time goes on, we understand that we have to think more creatively about how to grow the business.”
Getting more eyeballs on the ABL unit could be a real spark for a piece of the Rosenthal & Rosenthal business that both Miller and Rosenthal thinks is set to explode.
“We really feel this is a little jewel within the Rosenthal family,” says Miller of the ABL unit.
“We are better known as a factor, and factoring today probably represents 80% of our business,” says Rosenthal, while noting how the ABL and factoring parts of the business can complement and feed off of one another. “I don’t know if we have a specific target as far as growing ABL to a certain percentage, but I think where the market is headed, even on the factoring side, we’re starting to see deals that are not necessarily a factoring deal but may be sort of a hybrid. We think there is real opportunity on the ABL side and we’re prepared to grow it.”
Just getting its name out there more is not all that Miller hopes to achieve for the ABL arm. He also wants to hammer home to potential customers the clear advantages of Rosenthal & Rosenthal, primarily, its status as a privately owned entity that can provide more flexibility and creativity in the asset based lending environment.
“Our biggest differentiator is being privately owned. Everybody’s money is green. When credits perform well, everybody’s your best friend,” says Miller. “It’s when companies either need to expand and grow their credit facility or they hit a bump in the road and they need an over advance that it gets back to service, flexibility and creativity.”
Ensuring that the ABL unit can sustain such flexibility means employing new strategies as well. One of Miller’s strategies to expand and enhance the ABL portfolio is to stay on top of technology to maximize efficiency. That includes capturing data on sales, receivables, inventory, daily collections and daily disbursements. With that type of information in hand, Miller believes the ABL unit will continue to blossom.
“Capturing the data and utilizing the data to give you early warning signs to potential problems. That is really the name of the game on the portfolio side,” says Miller.
A Limitless Future
While James is focused on bringing a championship to the title-starved city of Cleveland, Miller has even bigger goals for the Rosenthal & Rosenthal asset based lending group. With minimizing losses and preserving capital the main responsibilities of the job, Miller also hopes to build what is already a $300 million portfolio at an incremental pace, striving to reach to $400, $500 and even $600 million over the next few years.
A major reason for Miller’s optimism about the future is Rosenthal & Rosenthal’s identity as a privately owned company, a trait that is a calling card of sorts, which allows it to circumvent some of the tighter restrictions that may be hampering commercial banks from doing deals with a larger selection of businesses.
“I see it as kind of limitless. As the banks get more regulated and feel an increasing level of oversight it’s really hurting them, but that increases opportunity for us,” says Miller. “We just feel that ignored, small, closely owned companies will like that flexibility and freedom to run their business, to maximize their profitability, minimize their taxes and generate cash for them personally, as long as we have it structured right, documented right and monitored right. That’s in essence Rosenthal’s niche.”