Gordon Brothers Finance’s newly appointed CEO Gene Martin has spent his 26-year career experiencing firsthand the changes that have shaped the modern global capital and credit investment markets. After several career-defining roles with Bank of America, Morgan Stanley and Credit Suisse, Martin has found a new home leading a team of fewer than 10 members at Gordon Brothers Finance, which he feels is one of his most compelling challenges yet.
Business on a Handshake
For Martin, leading a small team means enlivening the entrepreneurial spirit that comes from working with ambitious, like-minded individuals. In many ways, his latest role speaks to his very first job in specialized lending at Shawmut Bank, a super regional bank in Connecticut where Martin got his start in 1990.
“It was probably the best place on the planet to learn credit,” Martin says. Working at Shawmut with a variety of businesses, including small, family-owned and operated institutions, gave him tools to work with even the most bare bones of credit companies. “You had a lot of local businesses where people are used to doing business with a handshake, and the reality was, the banking business was starting to change and doing analyses that were much more sophisticated. So it was an interesting time to learn credit and have to explain to borrowers that you can’t do business on a handshake anymore.”
When his career led to joining Bank of America’s leveraged finance business in New York in 1995, the jump from buying syndicated loans at a regional bank to negotiating with large private equity sponsors was an unexpected — and welcome — challenge.
“I had the good fortune of being put on the team that covered KKR,” Martin says. “I said jokingly that I went from playing little league baseball to getting called up to play for the Red Sox. KKR was probably the biggest financial sponsor in the world at that time and certainly had one of the biggest names in the industry. It was an incredible learning experience. I covered five other sponsors as well with a managing director, and it was terrific. Bank of America was great to me.”
During his time at Bank of America, Martin worked with one firm that wanted him on their own team.
“There was a firm called Donaldson, Lufkin & Jenrette (DLJ). DLJ got me on the phone one day and said, basically, ‘Hey, we like working with you, any chance we can get you to come work for us?’”
Martin was not easily convinced. “I said, ‘Well, no.’ I was pretty happy with Bank of America. They had given me my first shot in New York, and I was loyal to them. They treated me well and I was in a good trajectory there. DLJ called me a couple more times after that.”
A business lunch and visit to the DLJ offices gave Martin a new perspective. “I went in and met with a bunch of folks there, and it was just an incredible place. You could almost feel the energy when you walked into the firm. After a lot of angst on my part, I decided to go. I was really taken by the people and what they were doing with the business and where they wanted to take it.”
Martin’s time with DLJ instilled in him a mentality he would apply throughout his career: work hard, but make work a happy place to be. “I got to work for a gentleman named Harold Phillips, who was a really tremendous, tremendous guy. One of the most impressive people I’ve ever met in my life. I also worked with Steve Hickey, who was equally impressive. I got to work with Harold and Steve on the ground floor of the operation,” Martin says.
“They took everything very seriously, and you didn’t want to walk into their office unprepared, but they made it fun. It wasn’t like we were throwing the football around, but it was about never taking yourself too seriously, and recognizing that, in these roles, you spend a lot of time at your job. You spend a lot of time at work. If you’re not happy, if you’re not enjoying what you’re doing, that’s not a recipe for success, professionally or personally.”
A Global Perspective
In 2003, Martin switched gears and joined Morgan Stanley as the company restarted its leveraged finance business, beginning as the managing director on the loan desk to assist in driving origination in the U.S.
“I was there about a month and a half when the woman who ran the loan business resigned to do something else. I sort of joke that they looked down the bench and they just went, ‘Ok, how about you?’” Martin says. “Morgan Stanley, which was an unbelievable firm as well, was really great about giving people opportunities anywhere on the globe within the firm.”
In 2010, Martin took over Morgan Stanley’s global leveraged finance business, responsible for both origination and syndication. Co-heading the business offered Martin a fresh global perspective.
Throughout his career, however, Martin continued to have a lingering thought about pursuing a role on the buy side. As banks underwent greater regulation in 2008, he recognized the opportunity. In 2013, he left Morgan Stanley, hoping to find a role in middle market credit.
“I thought of middle market credit as the most interesting place of credit because of what was happening in the banking industry,” Martin says. “I knew what was going on in the broadest syndicated markets, the regulation and new restrictions, so I thought that would be a really interesting place to start to get back to my roots and do something as an investor on that side of the business.”
Martin first joined Gordon Brothers as a board member. Earlier this year, when the previous CEO stepped down, he was approached for the job. “I was incredibly honored and humbled by the fact that they asked me,” Martin says. “It was by the far the most compelling opportunity that I could see.”
Gordon Brothers was founded in 1903 by three Boston brothers, Jacob (J.B.), Louis and Joseph. For more than a century the company has expanded, and it is now a global presence. In 2014, the company launched Gordon Brothers Finance Company in partnership with BlackRock Kelso Capital. This division partners with senior asset-based lenders to provide maximum capital in its asset-based, cash flow and hybrid term loans to middle market companies.
“It’s an opportunity to run a great firm with a really unique investment strategy. Personally, I would say I like working in a smaller team environment. Both have their pros and cons, but it’s fun to work in a small environment that’s more entrepreneurial and can move quicker. When you combine that with the market opportunity, it’s a really compelling situation,” Martin says.
Two Ends of a Continuum
Given the diversity of Martin’s career, he’s experienced both the benefits and unique challenges that accompany working for businesses of different sizes.
“You really have two ends of a continuum, and both are complex,” Martin says. “When you look at a global enterprise, there’s a complexity because they operate over many jurisdictions and currencies. In the middle market, the companies tend to be smaller, but there’s always a bit of a story with each one. They’re still complex. Oftentimes they’re family owned companies, and they’ve been through several generations. They’re sort of cognizant of those overlays on the business.
“Regional companies, or smaller companies, just break a little easier than the larger companies. One of the issues is, they just don’t have the level of resources. One of the things I think we do particularly well is provide solutions to that, and I think that’s key.”
Martin notes two major changes to the industry that have occurred during the course of his career: globalization and capital flows. “Twenty-six years ago, people used to talk about recessions being regional. Today everything is very interrelated in not only the globalization of economies. Also the capital flow and investing sides have really changed. Everything matters, so you have to pay attention to everything.”
Optimism in 2016
As CEO at Gordon Brothers Finance, Martin’s challenges are multi-faceted, from working with a small team to finding methods of larger outreach. “I had met some of the investment professionals who work here, but I didn’t really spend a lot of time with them. The challenge in your mind when you walk in the door is getting to know them well,” Martin says. “I’ve been really impressed with the people and the team, the history, the core, the desire to be creative in how they come up with solutions.”
Looking at the year ahead, Martin is optimistic for opportunities in both North America and Europe.
“I think the industry is playing to our strengths. There’s been some volatility in the broader credit markets. By and large, since the end of the third quarter and into the fourth quarter last year, you’ve seen some volatility in all of the capital markets, particularly in high yield and leveraged loan markets. With that volatility, you see stresses emerge from credit markets from both a fundamental and a capital market perspective.”
Martin says this unique setting sets an ideal backdrop for the business. His first major challenge, he says, is outreach.
“I think we need to get our message out there a bit more,” Martin says. “There’s a lot of opportunity. From a resource perspective, we’re going to hire a couple of people on the origination and underwriting side. I think a lot of people are looking for different ways to apply their trade in the investment world, and I think a lot of people see the same opportunity we do.”