Growing Originations with Fallen Angels

Wanna talk through how an insight like this can impact your company?

For the last several years, we’ve heard our customers complain about commoditization, too much liquidity chasing deals, pressure on margins, and other aspects of the same old song we hear upon the approach to the peak of each cycle.

Guess what? We are no longer at the peak of a cycle.

Now we shuffle to the next song. This song has lyrics about declining credit quality among the target audience and too much risk to invest capital.   And sure, the companies on the outside of your strike zone today will likely fall out, but a whole new segment of opportunities should simultaneously fall into your wheelhouse. We call them Fallen Angels.

Types of Fallen Angels

At the peak of the cycle, many companies that appear to be an excellent fit for your solutions ultimately have little interest in equipment financing or generally pursuing alternatives. These companies fit into a few categories:

  • The cash payers – balance sheets flush with cash are hard to close. Even if you are selling the value of life cycle management and establishing yourself as a structuring savant, companies that can drive vast low-cost liquidity to cover capex without leverage are a tough nut to crack.
  • The loyalist – companies that only have one lending relationship and enough dry powder in that exposure limit can also be challenging. Often it takes a service failure or failure to get out-of-the-box that opens the door, but there are fewer of those doors in good economies.
  • The cyclical buyer – some companies simply don’t have ongoing, month in and month out, capex needs. They tend to buy when significant shifts happen in their business and then kinda disappear for a few years until the next change of strategy.
  • The performance decliners – these companies are going through a season where the luxuries of stellar TTM cash flows and light leverage fade into memory. As such, they have to open their mind to a whole new cap stack—one that could include large scale equipment financing.

While we are sure more Fallen Angel personas exist, these tend to make up most of them. So, as we move into the U-shaped economic recovery, what are you doing to keep originations flowing when you know the bottom end of your strike zone is falling out of it? We recommend a messaging, sales enablement, and marketing strategy to go after the Angels.

Sawbux is a marketing firm that specializes in commercial finance. If you ever want to talk about this topic or anything like it, give us a holler.

Like this article?

What problem can we help you solve?