Products

• Economic Value Creation in The Leasing Industry; A First Look

  by James M. Johnson, Ph.D.
  Spring 2001 issue
  
  The subject of economic value, or the creation of economic value, is found in business periodicals, academic journals,financial news,and annual reports,and in the product and service offerings of consulting firms and compensation specialists. Interest is widespread. Since the year 2000, articles on value creation have been published in journals with a tremendous diversity of audience, business discipline, and focus. The notion of economic profit is not new, but interest in it is still relatively new. These metrics are of great interest to managers because they determine how they are compensated-value creation becomes a requirement for incentive compensation or employee retention.

  Free ($10.00 )

• Equipment Leasing and Finance: Continued Growth but Tougher Times

  Spring 2001 issue
  
  
  Is equipment leasing and finance a good business to enter? At the end of the day that is the question that drives a future oriented report.How does the 2001 Industry Future Council (IFC) answer the question? Yes-but not for everybody! The maturing of the industry and its market-place is now acting as a super-driver to create winners and losers among companies at000 a faster pace than in recent memory. Two other drivers are working to give leverage to market maturity as the ultimate enforcer of the economic rules of competitive markets.Those leveraging drivers are the economy, with its uncertainty and shrinkage in demand,and a tight credit cycle, which affects the availability and cost of capital. In short,a slowing economy and demand for equipment coupled with a tighter and smaller credit market to fund equipment financing products will create winners and losers at a fast pace.

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• How Revised UCC Article 9 Will Affect Your Lease Documents

  by Edward K. Gross
  Spring 2001
  
  A lessor carefully considers the various credit, residual,and other investment risks before participating in an equipment finance transaction. However, seldom is much attention paid to the basic legal implications of such an investment since they are, generally, well known and addressed in standard lease documents. Sweeping changes in applicable commercial laws are rare, and the occasional legislative or interpretive changes may be addressed by minor revisions to the lease forms or by changes in the performance of the related rights or remedies.

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• Integrating Disparate Entities; The Organizational Aspects of Mergers and Acquisitions

  by Shawn Halladay, John C. Deane & Joe Nachbin
  Spring 2001 issue
  
  One simply has to peruse any edition of Equipment Leasing Today to know that the mergers and acquisitions market in the equipment leasing industry has been very active over the past several years. The consequences of this activity have been varied, with effects on pricing, marketshare, and competition, to name but a few of the more visible facets. There are other, less visible facets,however, some of which directly correlate to the success of the acquisition or merger. These effects usually relate to the organizational aspects of actually completing the integration of the two companies in the transaction. With this in mind, this article examines recent acquisitions and mergers from an organizational perspective, specifically, how companies, when making an acquisition, integrate the target company into the acquirer's organizational structure. As part of this examination we explore the dynamics of organizational change, the experience of lessors in this regard, and conclusions that may be drawn.

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• Net Readiness of Equipment Leasing and Finance Industry

  The introduction of dot-coms and web-enablement of existing systems and processes has forced lessors to rethink their business strategies. Industry leaders are grappling with the implications that e-business has already had on their organizations as they attempt to upgrade the pace of their operations to net speed. At the same time, industry leaders' uncertainty about the future of their industry is disrupting their ability to devise long-term strategies.

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• Portfolio Management and Monitoring: Effective Methods to Risk-Rate the Existing Lease

  by Vernon E. Gerety, Ph.D.
  Fall 2001 issue
  
  Speed and efficiency have always been key components to the success of the leasing industry. However, profitability in leasing is predicated not only on faster but also better decisions.The landscape of leasing is littered with the casualties of those firms that could say yes quickly but could not accurately rate the risk. Surprisingly, an often-ignored major risk for leasing companies is the lessee that is already on the books. The financial health of a business changes dramatically over the life of the typical leasing relationship; however, it seems to take an economic slowdown to raise a lessor's awareness of the importance of tracking the lessee's financial health after the deal has been booked.

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• Risk Management Benefits from a Secondary Market for Lease Assumption

  by Robert F. Cunningham
  Fall 2001 Issue
  
  A continuing development in corporate finance has been the sophisticated risk management methodologies involving credit enhancement, hedging through derivative securities,and techniques and structures such as securitization for improved liquidity. This paper presents a brief economic and financial analysis of the developing secondary market for lease assumption,focusing on the incentive structure and the underlying rationale for a secondary market. The enhanced optionality and liquidity that this advance in the state of the art permits has the potential to create value for all market participants and, in particular, significant risk management benefits for lessors. Some recent analytic work has fruitfully applied the general framework of options technology to the equipment leasing sector. Leasing firms and other participants in the leasing sector can be thought of as holding and exchanging various bundles of options and contingent claims against both real and financial assets. These include mid-term and end-of-term residual values, interest rates, issuer credit, term duration, and tax benefits.

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• Risks and Returns in a Portfolio of Leases

  by Townsend Walker, Ph.D.
  Fall 2001 issue
  
  The purpose of this article is to provide an overview of how you might go about analyzing the risks and returns of the leases in your port-folio. Each of the principal risks is considered and suggestions offered on how you might go about modeling them.The returns and risks of each lease are then considered in the context of the portfolio. Due to the presence of different lessees and different equipment in your portfolio, its overall risk is less than the sum of the individual risks. Portfolio theory provides a way to obtain the most return for the amount of risk you are willing to take, and it shows the trade-offs between different levels of return and risk.This article also explains a number of different ways to manage a portfolio of leases Ð from securitization to credit derivatives to partnerships.

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• The Characteristics of Venture Lease Financing

  by Robert T. Kleiman, Ph.D.
  Spring 2001 Issue
  
  In the United States, venture leasing has been an established concept since the late 1980s. Venture lessors typically provide financing for general purpose equipment such as computers, telecommunication systems, test and measurement devices, and laboratory and office equipment for start-up and early-stage companies. However, one-of-a-kind specialized items are excluded. In exchange for the lease financing, the venture lessor receives monthly equipment lease payments, the equipment's residual value, and equity warrants in the company. The warrants provide the venture lessor with the opportunity to purchase common stock at a stated price up to a specified expiration date based on the price paid by venture capitalists in the latest round of financing.

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• Understanding the Propensity to Lease

  Special Report by Dun & Bradstreet
  Fall 2001 issue
  
  The equipment leasing industry is going through significant changes, and lessors consequently are facing a new set of challenges in the marketplace. One major change is the simple fact that leasing is a maturing industry. Leasing has become a traditional, mainstream method of capital budgeting and asset management financing. As the industry matures,leasing becomes a commodity product, and with that, new pricing pressures arise.  A consequence of leasingÕs losing its entrepreneurial luster is that it becomes more difficult, if not impossible, to charge premium prices if the perception is that leasing is not a premium product.

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