Andrew Pappas has always been an asset-based lender at heart. A first-generation Greek American and an avid fan of the Chicago White Sox, Pappas has worked at some of the most recognizable firms in the industry, and even when he took a brief break to try out cash flow lending, the industry’s call brought him back.
“ABL is a niche in the lending world that allows one to finance both growing/expansive and struggling companies,” Pappas says. “Thus, there is always a need for ABL lending (whether good or tough times) and I found the ability to do both as interesting and fascinating.”
Pedal to Metals
Pappas got his start in the industry as an underwriter in the ABL group at Barclays Business Credit. That group was eventually sold to Shawmut Bank, then sold again to Fleet Capital before being rolled into Bank of America Business Capital. At Bank of America, Pappas rose to the level of senior marketing officer and senior vice president. During his 14 years with the company from 1991 to 2005, he closed more than $2 billion in cash flow and asset-based credit facilities.
In 2005, Pappas took on a new challenge in the standalone cash flow financing sector when he joined MFC Capital Funding as a managing director. He stayed with MFC for six years and closed more than $200 million in transactions while working primarily on small private equity deals. Although he would leave the firm and the cash flow only lending space eventually, he learned valuable lessons in his time away from ABL.
“Different product and different focus,” Pappas says. “However, MFC Capital also taught me the importance of customer service, particularly with smaller businesses and owners.”
By 2011, Pappas was back in the ABL world, as he joined BMO Harris Bank in the wake of the Global Financial Crisis, an event that made Pappas re-evaluate how he could best use his skill set.
“The 2008 downturn made me realize that I add more value in ABL lending given my past experiences and it allows me to lend to both strong, performing and struggling companies and allows for more creativity,” Pappas says.
In the decade since he joined BMO and returned to the ABL and banking industry, Pappas has led BMO’s metals group as a managing director and team leader. The role entails the management of 13 team members, including professionals in business development, portfolio management and underwriting. Pappas oversees the growth of the group’s total book and is intimately involved with customers and prospects.
“I also encourage and train people to step up their game and be responsive to their clients to meet their needs,” Pappas says, noting that establishing the metals group and gaining acceptance within the greater bank has been “an exceptional accomplishment.”
Focus on Teamwork
Part of stepping up the game of his group involves Pappas’ staunch belief in BMO’s “One Bank” model, which calls on disparate departments to work together to find the right funding solutions for every customer.
“The ‘One Bank’ solution approach is critical in providing creativity and differentiating your product with customers,” Pappas says. “Simply said, I believe that to provide value to our customers today requires more than an ABL solution; it requires a total banking solution and that is where I have been most successful.”
As you might except for someone who makes a living closing deals, Pappas takes tremendous pride when everything comes together on a transaction
“The best part of the ABL process today, after all these years, is to sign up a new customer while utilizing the whole bank in the process and then work together internally to execute on the transaction and close on a deal that adds value to its customers,” Pappas says.
Aside from being able to provide holistic and competitive lending products, Pappas also believes that maintaining a focus on delivering exceptional customer service is “critical in dealmaking in the ABL world today.”
“It’s easy to lose focus on the customer,” Pappas says. “As I tell people, all money is green. What differentiates banking is personal service and customer focus. I am proud of our growth in this industry vertical, and except for an occasional sale or consolidation, our team is able to retain our customers.”
Even after multiple decades of working in the ABL industry, Pappas still finds joy in his work, particularly when he is able to help family-owned businesses succeed.
“What I like most about the ABL world is the ability to provide lending facilities to both strong performers and companies experiencing financial challenges,” Pappas says. “It is especially important to me to provide financing to a family-owned business (whether a new business or a long established one) and assist in their growth plans.”
Staying Vigilant
Pappas stands out as an efficient dealmaker because of his passion for finding the right solutions for his clients, causing him to fight internally when he has too to get deals across the finish line.
“At times, this has forced me to be vigilant and to pursue as I believe it is the right thing to do,” Pappas says. “This definitely can result in disagreements within an organization, but I have never been shy about pursuing deals and companies I believe in. There are deals I have done that now are considered excellent clients, but we might not have pursued if I was not vigilant.”
As much as Pappas is dedicated to the ABL industry, he has seen it change tremendously since his career started, with ABL transitioning from the “lending of last resort” to being one that dominates industries like retail and metals. According to Pappas, the creation of more flexible criteria (the spring availability concept) for the product in the late 1990s, including the reduction of reporting requirements and financial covenants, opened it up to larger companies while providing more variety for middle market firms.
“The ABL product has survived and grown during each downturn as it continues to prove out as an excellent product for many clients, especially among cyclical industries,” Pappas says. “The ABL product has improved and evolved tremendously and more bankers are better educated today on the product than ever before.”
Pappas wants to see that education continue and for the ABL industry itself to analyze more industries and continue evolve to meet the needs of clients.
“Having an open mind is critical to growth and re-evaluating how we conduct business will continue to be important in the future,” Pappas says, noting that emerging technologies are providing improvements to the process but will never overtake personal interactions and relational skills.
“I have learned that hard work, a humble approach, strong listening and communication skills, treating employees with respect and challenging them to expand their knowledge, providing a competitive product and being responsive to customers on a timely basis are critical for success,” Pappas says.