Equipment Leasing brokers
Investment into your business
Even modestly sized equipment leasing brokers are now setting up and running their own lease book. The main reasons seem to be:
• Reducing reliance on funders
• Additional profit centre from interest earned
• Ego and positioning statement (I do not wish to be rude to other leasing brokers, but this is a real reason why some people set up their own book. It looks and sounds great to be able to say you are running your own lease portfolio, however small.
• Building stronger relationships with suppliers and customers
• Pension planning, having something to sell
The key challenge to setting up an own book portfolio is cash. Often when I call a leasing broker to see if there is any desire to sell, one of the first things they ask is “will we invest in their own book?” Sadly, the answer is no, I would rather use our spare cash for investing into other leasing brokers or buying customer portfolios.
Angel investor leasing broker
If you are looking to set up your own lease portfolio and are looking for an angel investor or other investment, one of the ways to do this is to sell one of your existing lease portfolios. For example, when ING Lease UK shut down for new business, we bought a brokers ING customer base. We have also done deals where we just acquired the Grenke customer base from another broker. We secure the investment against end of term income and you the broker receives a cash injection into your business today.
Selling a lease portfolio
Selling a lease portfolio is a relatively easy process. For the sake of clarity, I am talking about a broker selling a list of lessees for either one or a multiple number of finance companies.
1. Sign an NDA
2. Check who the funders are, will we be allowed to acquire the portfolio? In most instances the answer is yes
3. Undertake a credit check on the lessees, or if the list is too big, we would just look at a sample
4. Agree a sale price
5. Sign a simple three page “Sale and Purchase” agreement
6. You the broker, raises an invoice for the customer base, we pay in full upfront. The cash is then in your bank to spend on whatever you wish.
Examples of lease portfolio acquisition
We bought one portfolio where we shared the upside. Once the £40,000.00 price was paid for in full (from invoices we raised to the clients), plus interest, we split all other secondary rental and title sale 50/50 with the seller. This worked well for both of us.
It may well be that your leasing brokerage has value tied up in the business. If you could do with a cash injection, then please give us a call- 01494 611 456
Jeremy Hall, CEO of WestWon Limited