Well, thank you guys so much for joining us today, and I'm,
I'm super excited to welcome this individual.
He is a person that has a wealth of knowledge and equipment financing.
He's been in the industry for over two decades and he has done
so much for this industry. So, without further ado,
go ahead and introduce yourself, your title, and I know who you are,
but tell our audience, uh, who you are.
Sure. Thanks Johnny. Uh,
my name's Andrew Carmen and I happen to be the senior managing director here at
S Q N Capital Management. We are a, uh, equipment leasing, uh,
financing provider. I'm also the, uh,
chief executive officer and founder of the Pina Report,
which is a credit technology that helps folks in this industry package deals,
uh, assess deals and place 'em in the market faster and more efficiently.
So let's get straight into it. Sure. So in equipment and financing,
there's a lot of different branches.
There's a lot of different things you can do.
So specifically for your companies,
what type of equipment and financing do you guys work with?
We work with the wide range of industries from healthcare to manufacturing,
to transportation, marine, air and rail,
as well as things like injection molding and, and machine tooling.
So we cover the gamut, Johnny.
So how long have you been in the industry and kind of walk us through if there's
any specific equipment market that does smaller deals like the, the,
the gambit of deals that you guys work with.
Sure. We work with things from a small, as small injection molding machines,
but also like 3D printers.
We'll see those transactions and small pieces of construction equipment like a
Bobcat, um, et cetera, all the way up to, you know, a, uh, a wide body,
uh, aviation, commercial airline.
How many years of experience do you have under your belt with, uh,
this specific industry?
More than a couple decades, about 30.
So for brokers that are starting out in this industry, what problem or what,
uh, challenge have you seen specifically in this day and age that they're facing
right now?
Well, a couple things. As deals aren't getting closed,
there's plenty of deals that get identified.
Funding sources like banks now are pulling back and the reason they're pulling
back is twofold. One is interest rates, number one,
their own cost of capital continues to be increasing and that makes it
difficult for them to find a transaction and actually, uh,
officially decide on doing a deal to approve a deal, uh,
because they don't know what their margin will ultimate ultimately be. Secondly,
they're worried about can the company that they're gonna finance for the piece
of equipment, can that company maintain, uh, their own cash flows?
So let's talk about that. Brokers are not closing deals, right?
So specifically with high interest rates,
that's not playing in their favor and that's not something they can control.
Exactly.
So what do you do as a brand new broker that's trying to break into this field?
What do you do? How do you maneuver that?
Great question. Like I said earlier, focus, secondly,
separate the things or identify what you control and what you don't control.
You're spot on. They can't control interest rates.
They can't control the behavior of a financial institution or funding source.
What they can control is knowing their deal,
knowing their customer as best they can,
knowing the funding source and what they need.
So package that effectively together. Remember,
this is a relationship business even in 2023. It hasn't changed in that regard.
And so if you can present to me consistently,
and we don't expect you to know everything about your transaction,
but if you can identify what is needed in a transaction and you come to us and
you say, look, we know these three things, what would
You say is the single most important thing that every broker starting off in
this industry should know?
It's really critical for new, uh,
brokers in the industry and they can be successful.
Focus initially both on the industry equipment and then on a handful of funding
sources like us. And then we work together and actually confidence builds.
And the next time you show me a deal, I'm not asking 10 questions,
I'm asking five.
Let's talk about from start to finish.
Kind of walk us through how do you get a deal, work it,
close it.
So you've identified a need, you found somebody who wants the equipment, uh,
finance, you've found a potential funding source. Now the real fund starts,
and what I mean by that is figure out who you're getting paid from.
Are you picking up a fee from the funding source, two points, five points,
whatever it may be? Or are you getting paid by the client? That can happen too.
Takes longer to get to that position,
but I expect you to know the deal and help me get it across the finish line.
So what happens, you know the deal, you found the equipment,
you've presented it,
it's okay to feel out pricing and you may want to call around or present the
deal to a couple of different folks to get a sense for that.
Once you've narrowed that down and you've got one or two parties that are really
interested like me, then we start working on getting the customer on the phone.
So you get the customer and me on the phone,
we have those diligence discussions, and then we take it from there.
And you're a point person,
which means that you need to be responsive and don't focus on 15 deals at a
time. Focus on two or three so that when I call you,
you are there and I at least feel that you're chasing the answers down.
So a lot of people have this mindset that the more deals they chase,
the more money they're gonna get. Why is that fitting
The Craig mind? It's the, it's the absolute opposite.
I think it comes down to what type of broker somebody wants to beat.
And I would say there are plenty of brokers that play the volume game.
And what I mean by that is coming across any type of deal,
throwing it over the fence, you know, and that works sometimes.
And if you get a bigger, a big size deal,
you might be able to make a sizable fee that only works in booming markets.
In this market in particular, you have to go. Less is more.
You have to focus more,
you have to be more thoughtful and purposeful about how you package that deal
and how you place that deal with whom.
And I think you need to spend more time and you might not close deals earlier in
the year because you need that timeframe to, uh,
to get deep and build a relationship.
But I think you'll find by the end of the year you'll close probably more deals
at a higher margin because you've focused and you've helped me, uh,
answer questions that I have. That's what's critical.
What's the number one mistake that brokers do when they're getting ready to
close a deal? What is the thing that you've seen that's the biggest, uh,
that's the biggest no-no.
Well before they're just about to close a deal or early on.
Oh, that, that would make this deal fall apart.
Oh, they,
they drift off back or they actually stop being there for me.
I'm not confused. We know that they also represent the customer and the client,
but in most broker relationships,
it's the funding source that's paying the broker fee.
And so we don't expect them to, uh, you know, do everything in our favor,
but we expect a transparent relationship.
So brokers face a lot of obstacles nowadays. Um,
what are some other obstacles that you have seen they face?
So what are some solutions?
That's a great question.
I I think they face a lot of things where they sometimes focus too widely.
So they find a deal and yes, it's a legitimate deal. A customer needs financing,
but they really don't understand the industry. So they may come across a manuf,
you know, a plant, a manufacturer who wants to do an entire manufacturing line,
but they've spent most of their time focusing on smaller deals like construction
deals or you know, maybe over the road trucking, small logistics companies,
another great little business for brokers. There's a lot of, you know,
small trucking companies that need help. Um, and all of a sudden I'm used to,
I've seen five deals from broker ABC in trucking or in injection molding,
and all of a sudden I see a 10 million manufacturing line that they
have no knowledge of the equipment,
they have no knowledge of how those transactions get worked out in a bankruptcy,
and they have no real knowledge of how to position that deal with me.
That is a huge mistake.
I see brokers trying to be everything to everybody and really following the
deal. That happens to be a legitimate deal,
but it's not the right deal for them.
So it's really hard to walk away from a transaction that will
close in the next, you know, three to six months or 12 months,
but you may not be the person to get it across the finish line.
So what I recommend in those situations, find somebody who is team up,
you'll split the feet. It's not too different from real estate brokers.
So the name of the game and the goal of this specific industry is being
efficient. Yes. Having a system in place mm-hmm. To make money. That's correct.
So if someone put has a system in place and they have their own their own,
you know, system where they get the job done,
they're having success mm-hmm. In their first year,
what is a salary? They could expect?
Salary.
I can't speak to the salaries because I think there's a lot of individual
companies that start out sole, you know,
individual brokers and so how much are they paying? Sell,
don't know if you're gonna go work for a broker,
if you're gonna be on the inside sales desk, you know, uh,
maybe 30 to $60,000 is a sales base plus commission.
Normally what a lot of brokers do, if you wanna learn the trade and you're,
you're willing to spend a year or two with one of the major broker houses,
they're gonna be looking for inside sales reps. They pay them a base,
a small base, high commission,
or normally a lot of 'em will pay you up to 15% of the fees that get generated
on a deal that you, uh, you originate. So that's, that's one angle.
If you're running your own shop or you're part of a small team and you're
originating deals and placing them, uh,
completely with a funding source like me,
you can pick up anywhere from 2% to this is where I get jealous.
10% of a transaction based on how you structure it. Your
Advice for the young guys that are young people, let me rephrase that.
Young people that are getting into this industry, right?
And they wanna make a million dollars, they wanna make the big,
big money you're getting
Now you're getting me jealous of
Their general, yeah, I want a million dollars. Right? But for those guys,
what advice would you say would you give them in regards to the time period they
have to put in to make big money? Three
To five years? You can go make minimum. You can go make, yes,
you can go make decent money if you want to in three years you have to go work
for another larger firm, but you're grinding,
you're gonna have a certain patch that you can work i e zip code or states or
region or product type. Uh, you're gonna be smiling and dialing.
That's not necessarily bad,
but if you're good at that and you don't mind the grind, it is a lot of work.
And the challenge with that though is you're working for somebody else and so
you're not really building equity in your own pipeline that you've spent years
maybe pu pulling together, you'll be rewarded, but you know, not as much as if,
for example, you did that for a year,
bounced off and perhaps started your own shop. I hope my,
my current partners and customers out there on the broker side don't hear this.
Um, you know, but go off on your own so to speak or join a smaller team.
Smaller teams has have less overhead and don't be greedy on the fees.
It's okay to earn two points on a deal.
It's okay to work with another broker and earn an a appointment. The deal,
get the deals closed. When you get more deals closed,
you build momentum and within five years you're gonna have people knocking at
your door, seeing you as an origination machine and wanting to know,
do you want some equity to come into your business?
And how do we make you a finance company? That's what happens.
Andrew,
thank you so much for joining us and for sharing the wealth of information that
you provided here, because I know brokers out there appreciate that information.
Johnny, it's been great. Thank you very much.