In April, commercial and specialty finance veterans Mark Seigel, Evan Nadler and Tony Liobis announced the launch of Crown Partners, an independent advisory firm specializing in senior credit facilities and loan products for U.S. companies in need of incremental working capital, executing an acquisition, or undergoing a turnaround. The team assembled to launch this new advisory firm are not strangers by any means, having previously led Veritas Financial Partners, a highly successful private equity sponsored direct lender that provided senior secured loans including working capital credit facilities, bridge real estate loans, factoring and other structured financings.
ABL Advisor met with Mark Seigel, Managing Partner of Crown Partners to learn more about the focus of this highly seasoned team, their long-term vision, and the opportunities they foresee in the commercial finance sector.
ABL Advisor:Thanks for being here with us today Mark. On April 13th you announced the launch of Crown Partners. Can you tell us a little bit about the timing of this announcement?
Mark Seigel: My partners and I were colleagues for many years at Veritas Financial Partners, which was a direct lender. After our sale of the business in 2019, we found ourselves routinely brainstorming the best ways for us to focus on what we enjoy doing most, and where we can make the greatest impact. While there were various iterations of business plans considered, our thoughts always centered around improving the experience for both borrowers and lenders using our specialized knowledge of the senior debt market and all the factors to consider to successfully close a transaction. A lot of those conversations involved thinking through the various pain points in the origination and underwriting process that we ourselves had experienced over the last decade. This led us to design our platform in terms of how we improve the experience as much as possible for all parties.
In terms of the exact timing of launching this spring, we believe there will be robust demand for refinancing transactions from lower middle-market borrowers as the business world moves on from the pandemic and associated stimulus programs. Whether it's three, six or nine months from now, we want to be positioned and rooted with the ability to serve a broad set of clients as transaction velocity expands.
ABL Advisor: Crown Partners is playing an advisory role in the market. How do you see your role in the market and how will you differentiate Crown Partners from some of the other advisory firms?
Seigel: Our role in the market is to utilize our specialized knowledge, market intelligence and industry relationships to help clients accomplish their debt capital needs efficiently and with the right capital partner. We believe our decades of experience as a direct lender is an important differentiator for us. Given we have sat in the roles of executive, chief credit officer, business development officer and underwriter, we are able to help clients frame their credit needs and their business opportunity in a way that aligns with how lending institutions screen transactions. By knowing how to present an opportunity and being able to foresee challenges that a lender would encounter during the underwriting and documentation stages, we can greatly improve on what at times can be a high friction process.
ABL Advisor: Please tell us about the core team and the roles of Evan Nadler and Tony Liobis. Are you planning on expanding the team in 2021?
Seigel: Evan, Tony, and I are partners in this business. The reason our partnership works is we have different and complementary strengths. We believe, and have experienced, that by pooling our talents we're able to bring the best experience to our clients. For example, Evan – having spent the last decade deeply entrenched in the deal sourcing and structuring world – has an innate understanding of what business development officers need to effectively present those opportunities to their credit committees. He possesses a keen understanding of the screening process and how to navigate various lending institutions.
Tony, who was most recently chief credit officer of Veritas, and has several decades of experience in all areas of underwriting, credit management, and workout adds a significant amount of credit heft to our advisory mandates. Tony is – to put it lightly – a rigorous credit mind and he puts our clients through the ringer up front to identify credit weaknesses and help contemplate deal structures that will work. This is a key part of our client experience because flushing out the key issues and challenges up front ultimately solves a lot of the so-called curve balls that can derail an underwriting process but were avoidable.
As for expansion plans, one of our three guiding principles when we launched was to build a platform that will attract the most talented and high caliber people in our industry. That is a long-term goal of ours. But having been an entrepreneur in a variety of industries, I understand the value of focus and building a strong foundation before trying to grow headcount. For 2021, our plan is to execute on serving clients, building awareness, and generating wins in the marketplace. If we do that well, I look forward to a future interview with you when we talk about our expansion and hiring plans.
ABL Advisor: Will you be focusing on any products, for example, working capital loans, bridge loans, unitranche, commercial real estate, factoring?
Seigel: One of my favorite aspects of our business model is that we're able to focus purely on what is in the client's best interest versus trying to fit the loan need into a specific product box. We focus first on what loan structures would best serve the client's situation, and then drive our efforts accordingly. Thus far, we've looked at opportunities in all the verticals that you mentioned and more. As an example, we have a current engagement with a lender finance client. During that engagement, it became clear that a piece of mezzanine capital would be necessary to bridge liquidity needs. While I do not consider junior capital to be our primary focus, when it became necessary as part of a client solution, we rolled up our sleeves, came up to speed quickly on the likely suspects in the market, and now are working towards a funding.
Our firm culture is very entrepreneurial and hungry to generate wins for clients. Part of being entrepreneurial is finding out of the box solutions and being prepared to adapt. Anywhere that we can leverage our main expertise and generate solutions, that's where we're going to earn our seat at the table – by focusing on complex, niche, or otherwise challenging situations.
ABL Advisor: Are you industry agnostic, or are you focusing on certain sectors such as manufacturing and distribution?
Seigel: We're industry agnostic. What we're not agnostic to is the mindset and the situation of the client. We look for clients that share our sense of urgency and responsiveness. That understand that they are well-served to have professionals with subject matter expertise representing them and who have realistic expectations of an outcome. What energizes us most is being introduced to a situation where there's a critical need that we can address and high stakes of raising the necessary capital. That's when the adrenaline is flowing, and we believe that we may have an opportunity to significantly impact a client's success. It's about focusing on the situation and whether the client's attributes and expectations align well with our culture.
ABL Advisor: What’s your outlook for the commercial lending sector for 2021? Do you have any primary concerns when you're looking at the competitive landscape?
Seigel: Our premise in launching now is rooted in our belief that there will be a significant uptick in demand for refinancings as we all collectively move forward from the last 15 months’ market disruption. We're now working to build out our market reach and brand in anticipation of that activity. The extent to which we’re right about increasing refinancing volume will drive, to some degree, our acceleration in the market. But our success will be driven much more so by our own internal execution, not market or competitive factors. Are we articulating our value proposition clearly enough to prospective clients? Are we providing an exceptional experience to clients and lenders? Are we explaining how we can be useful to referral partners and benefit them? Are we constantly improving our own workflows to raise our game and act like a well-honed business, not a start up? If we do those things well, we will be successful regardless of market factors, and if we don’t do those things well, nothing else matters.
ABL Advisor: You mentioned the lower middle market. Is that where you are mostly focused? How do you define the lower middle market?
Seigel: We've defined our target market in terms of transaction size at $5 to $75 million. That is a function of the deal structures, relationships, and knowledge where we believe we can have the highest impact on both borrowers and lenders.