Three leaders from this year’s ABF Journal Power Players list in the Activators category share how rising risk, regulatory pressure and shifting market dynamics are redefining what lenders need from their advisory partners.
In a market where risk signals are louder, borrowing bases are harder to trust and sector stress rarely moves in a straight line, the advisory role in specialty finance has entered a new era. Today’s lenders want more than transactional support. They want conviction and judgment. And they want advisors who can help them navigate collateral that behaves differently by the week. This roundtable brings together three of this year’s ABF Journal Power Players in the Activators category — Don Clarke of Asset Based Lending Consultants, Sunil Garg of Insight Examination Services and Tom Greco of Hilco Global Professional Services — to break down how their work has changed and what lenders must prepare for as the stakes continue to rise.
How has the advisory role of specialty finance service providers shifted in today’s more complex, risk-sensitive market?
DON CLARKE: From my vantage point, the advisory role has moved well beyond transactional support. In a market defined by heightened risk sensitivity and economic uncertainty, lenders are looking for partners who can apply real historical experience to present-day conditions. Having navigated past downturns and multiple credit cycles, including 1992 and 2008-2009, I’ve seen how valuable precedent is when evaluating today’s risk signals.
Through ABLC, my approach is to help lenders cut through complexity. It’s not just about interpreting data; it’s about understanding the underlying behaviors and patterns that influence credit quality. The end goal is to provide lenders with the context and clarity they need to make sound decisions.
SUNIL GARG: As the new markets evolve, existing markets mature and certain industries are in decline, each one of them requires special handling for specialty finance market as well as still following relevant protocols and back to basics approach for risk assessment. The cookie-cutter approach will not work, and a customized approach for each industry, borrower and risk should be established and followed by service provider. Current trends require that service providers be aware of changing conditions and acquire knowledge from different sources. AI agents like ChatGPT should be used as a tool but not a source of assurance, as information from them may not be accurate, and also can give a false sense of knowledge, which is not good for risk assessment. The specialty service providers need to invest in personnel, software, training and knowledge base to make sure that their organization have understating of the complex new markets. For example, in a new sector like digital marketing, where traditional proof of services is not available, the service providers need to understand and advise lenders how to assess their risk and collateral. This requires diverging into new procedures and protocols in providing assurances to lenders while still doing traditional procedures like turnover, dilutions and trends to make sure that collateral is performing.
Knowing the basics of risk management and assessment will give lenders clarity in these muddy new waters.
TOM GRECO: From my vantage point, the advisory role in specialty finance has fundamentally changed. The advisory role has expanded well beyond transactional support to encompass full-lifecycle, risk-aware partnership. Clients now expect advisors to combine financial judgment, operational insight, sector intelligence and real-time data analysis to navigate today’s heightened uncertainty. Anything less is inadequate for today’s environment. This evolution reflects both increased market volatility and the recognition that collateral behaves very differently across industries, requiring deeper, more nuanced evaluation.
Bankruptcies, refinancing pressures and uneven sector-specific stress have raised the premium on advisors who can validate asset existence, accessibility, defensibility and resilience under stress. Yet the stress is uneven, varying widely by sector, and lenders now require advisors to interpret the operational and structural factors that influence collateral performance in each industry. Furthermore, there is an increased need to understand the interplay of multiple asset categories on a collateral’s true liquidation recovery value. For example, we know that selling connected fitness equipment that historically relied on subscription revenue, app connectivity and ongoing content updates must be assessed very differently in a liquidation scenario. And in the pharmaceutical sector, vendor rebate programs often support gross margins in the ordinary course but typically disappear during a wind-down, requiring recovery values to be based on a lower adjusted margin. Similar nuances exist across Automotive, Metals, Chemicals, Forestry, Food Processing and other industrial categories, each with its own distinct value drivers.
Advisors today are being engaged earlier in the process to shape structures, covenants and borrowing bases and remain active post-close to provide ongoing monitoring and early-warning analytics. Clients aren’t only asking what assets are worth; they want assurance that assumptions, systems, and processes will hold up under scrutiny.
At Hilco Global Professional Services, this shift has reinforced the importance of placing financial analysis within operational reality. Leveraging decades of sector-based data and expertise, we help clients translate complexity into clarity, ensuring collateral values, processes and risks are understood with rigor and speed in an environment that leaves little room for error. Today’s market requires advisors to exercise acute curiosity and comprehensive understanding to effectively tailor solutions to client needs. Professionals capable of delivering expert advisory services and transactional support throughout all phases of a company’s lifecycle remain indispensable partners to their clients. In an environment with little margin for error, the market is turning to advisors who bring conviction, not just analysis.
What regulatory or compliance issues are currently top of mind for clients in asset-based lending and private capital markets?
CLARKE: Right now, lenders are focused heavily on covenant compliance, borrower reporting and the traceability of collateral information. With remote and hybrid reviews becoming standard, the expectation for accurate, verifiable and audit-ready data has only intensified. Clients want confidence that what they see from borrowers is complete, consistent and compliant; regulators expect nothing less.
GARG: The tariffs remain the number one regulatory issue for the majority of clients of ABL and private capital markets currently. The uncertainty surrounding tariffs on several fronts has resulted in disrupted supply chain, increased inventory costs, inability to pass on the tariff cost to customers, reduced sales, reduced gross and net margins. And finding new suppliers in lower tariff countries has been noted to have mild to moderate impact on many clients.
Once tariff rates are established [and] new suppliers are onboard, increase in domestic industrial production and changes in consumer behavior will all determine the outcome of tariff impact on many clients in 2026.
GRECO: Across both bank and private-credit markets, allocators are focused on how new capital frameworks, transparency expectations and risk-management standards are reshaping credit. Basel III Endgame remains a primary concern for traditional lenders, driving reassessment of collateral management, risk weighting and pricing methodologies even ahead of full adoption.
In private capital markets, LPs are raising expectations around underwriting rigor, valuation consistency and portfolio surveillance as defaults rise. This is accelerating the convergence between bank and nonbank lending standards, particularly around data integrity, documentation quality and defensible asset marks.
Cybersecurity is also rapidly becoming a frontline underwriting and compliance issue. Investors and lenders who incorporate cyber diligence, vendor-risk assessments and covenants addressing cyber readiness are increasingly differentiated in the eyes of allocators.
Disclosure and Transparency: The SEC is heavily focused on ensuring adequate disclosure of conflicts of interest and fairness in calculating and allocating fees and expenses in private funds. There is also new guidance around the use of Net Asset Value (NAV)-based financing facilities, encouraging clear language in fund agreements and increased disclosure of associated conflicts and risks to limited partners.
Recordkeeping and Electronic Communications: Regulatory bodies like the SEC continue to crack down on firms that fail to meet recordkeeping compliance standards, especially concerning the use of unapproved electronic communication methods like text messages for business operations.
Together, these trends point to a landscape where transparency, governance and data discipline are no longer optional and are now core requirements for access to capital.
Where do you see the greatest need for advisory intervention in today’s environment?
CLARKE: The greatest need at the beginning of the credit relationship is forensic, fundamental underwriting. Competitive pressure has led some institutions to relax diligence standards, and that’s where problems tend to originate. I see the most impact when we are brought in early to validate collateral, reinforce protocols and help restore the rigor that should anchor any credit decision. That upfront discipline protects both the lender and the borrower.
GARG: As we move from the information age to the AI age, the next two to three years will change how we do business, lend, hire and provide services. The service providers need to advise the lenders regarding the accuracy of information, not relying on information generated by AI alone. AI models are getting sophisticated and are good sources of information, but lack judgment. The greatest need of advisory intervention currently is making sure that lenders do not move away from traditional ABL field exams, where the examiners are the eyes and ears of the lenders and the foot soldiers making judgments, which is still not possible [with] AI. It is important that lending decisions not be based on AI models, which do not have a human perspective, experience and ability to make decisions. AI is definitely useful and a tool, but currently not equivalent to human intelligence.
GRECO: The middle market remains the focal point for advisory intervention as refinancing challenges, liquidity strain and operational shortcomings converge. Companies increasingly need rapid assessments of assets and liabilities, swift refinancing or sale processes and targeted operational restructuring. Distressed businesses also face elevated cyber vulnerability, making data governance and cyber readiness essential components of any turnaround strategy.
Traditional lenders as well as newer private credit platforms are looking for support in strengthening underwriting discipline and enhancing collateral monitoring between periodic appraisals and field exams to ensure borrowing base reports are accurate. With defaults rising, the market simply will not tolerate weak or outdated collateral reporting. This is where our independent oversight, multi-lender alignment and grounded valuation methodologies create real confidence. The increased demand for forensic support, litigation expertise, Article 9 processes and liability-management opinions shows just how critical objectivity has become.
Geopolitical instability has amplified these needs, especially in sectors exposed to supply-chain disruption, conflict-driven volatility and non-state actor risks. Hilco’s Geopolitical Advisory Unit provides actionable intelligence that helps institutions anticipate shocks, protect value and adapt operationally in real time. Across these dynamics, advisory intervention is fundamentally about providing clarity and decisive guidance where risks are accelerating.
In short, this is a moment that rewards precision, judgment and decisiveness.
What are your key predictions for how professional services will evolve in 2025 to meet the changing needs of lenders, borrowers, and investors?
CLARKE: I believe that professional services will continue moving toward a model that blends deep industry experience with scalable technology. Firms that succeed will be those that recruit seasoned professionals who understand credit cycles and invest in tools that allow for efficient, remote and more comprehensive analysis. What won’t change is the importance of judgment. Decades of market exposure cannot be replaced by automation. Technology will enhance our reach and consistency, but interpretation — the ability to see what numbers don’t explicitly show — will remain a human responsibility.
GARG: I believe that the following are the key predictions for 2026 in how service providers will meet the changing needs of lenders, borrowers and investors:
1. Developing an acceptable use policy for AI tools and digital data management. The service providers will need to understand where all the data is stored and shared all the time. A robust IT management and training of the personnel will be needed to make sure data is available and secure while still allowing the teams to be productive. Adoption of AI enabled tools for greater insights, tools like note takers, Chat GPT for search [and] other AI models will be adopted and accepted.
2. There will be larger and more complex deals requiring specialty service providers. The larger deals will need to be serviced by teams and collaboration between lenders and providers. Complex organizational structure of borrowers, which may be located in different countries and time zones, may pose a challenge to service providers and their ability to work internationally. The training, setting up the right culture and new ways to work will be needed as [the] need to work internationally will increase.
3. The one to two personnel firm will have a hard time continuing to provide services as compliance and regulatory requirements increase. The increase in regulation, insurance and compliance will also lead to [an] increase in cost and per diem rate. This will trigger consolidation in service providers, and big will become bigger and may lead to fewer providers. This, in turn, can lead to higher cost for services. Inflation remains high, and [the] cost of doing business will stay high. Service providers will need to establish best practices to contain costs while still providing quality of services.
4. Due to tariffs and inflation, cost of monitoring being high, higher risk lending and other factors could result in defaults noted in Q4/25 to continue in 2026. To avoid defaults, lenders may increase their monitoring, and the service providers should be ready for increased volume and complexity and ready to serve as and when the lender, borrowers and investors require services.
GRECO: By 2026, professional services will become more integrated, data-driven and technologically enabled as credit conditions tighten and risk oversight intensifies.
1. Deeper integration of valuation, operations, monitoring and capital.
Clients will expect real-time asset intelligence, dynamic borrowing bases and earlier detection of emerging risks. Advisors will increasingly operate as continuous partners rather than episodic engagement providers. Clients won’t just want a report; they want a partner who can help design the structure, monitor it and, if needed, step in with asset monetization or capital solutions. Advisory services and capital will converge to deliver that full lifecycle solution.
2. Global complexity will elevate cross-border expertise.
As geopolitical and supply-chain dynamics reshape business models, lenders will rely more on advisors with international reach, particularly for perfection laws, enforcement pathways and global asset recovery.
3. Verification and visibility will be non-negotiable.
With growing emphasis on data accuracy and asset visibility, physical inspections, operational walkthroughs and enhanced collateral verification programs will become standard features of credit execution.
4. Technology and AI as accelerators of risk governance.
Cybersecurity, data governance and AI enabled analytics will be central to advisory services. Professional services firms will be expected to help clients modernize systems, strengthen controls and leverage AI to expedite decision-making and improve predictive accuracy.
5. Regulatory and risk advisory will be embedded into core products.
As supervisory focus on nonbank finance intensifies, regulatory, compliance and policy insight will no longer be a separate workstream. It will be built into how valuations, field exams and transaction opinions are delivered. Lenders will expect professional services firms to help them demonstrate not just that a deal makes sense economically, but that it is consistent with emerging regulatory expectations around transparency, resilience and systemic risk.
Ultimately, the firms best positioned for 2026 will combine sector-specific expertise, technical depth, global perspective and the ability to harness technology to deliver faster, more accurate, and more actionable insights. Hilco Global is already operating at that standard and in many ways, setting it. •
