Regime changes are rarely easy. For the Equipment Leasing and Finance Association (ELFA), though, that has not proved to be true. When the ELFA announced last year that Woody Sutton would be stepping down as president and CEO, instead of creating a power vacuum swirling with uncertainty, the association that represents the more than $1 trillion equipment finance industry knew just who to tap.

His name, in case you were unaware, is Ralph Petta — the association’s chief operating officer for the last five years. His roots, however, stretch much deeper than the last half decade, as Petta can trace his introduction to what was once called the American Association of Equipment Lessors (AAEL). Petta spent most of the ‘80s (nine years to be exact) working in the office of Senator Sam Nunn. As the decade came to a close, Petta began looking for something else to pursue.

Enter Michael Fleming, the former head of the AAEL, who Petta met through a mutual acquaintance. Fleming was looking for a staff professional to run the data collection, research and state government relations program for his association. Petta fit the bill, and the opening was just the type of new direction Petta was seeking.

“I decided to take a chance, even though I knew nothing about the industry. I knew very little about the trade association as well, but I decided I would try it,” Petta says. “It sounded like a great opportunity. I learned pretty quickly that I didn’t know much about the industry. I threw myself into it. I read everything I could get my hands on about the leasing industry, met a lot of people and talked about the business.”

Man for the Job

In the 28 years since he started, Petta has been a jack-of-all-trades for the ELFA, serving in just about every post. In fact, when Chairman Bill Stephenson introduced Petta as Sutton’s replacement at the association’s annual convention last fall, Stephenson said that Petta had run every department, including the Equipment Leasing and Finance Foundation, at one time or another.

“Even though I’ve been employed by the same organization for a number of years now, the reason I’ve stayed is because my job is always changing. I was always evolving,” says Petta. “So it seems like I’ve been preparing for most of my career to do this particular job. I’m really grateful for the opportunity. I guess I’m where I am because I decided to learn the nuances of the equipment leasing and finance industry and became knowledgeable about our members’ business, which helped me to recognize and understand what their needs are.”

During the last five years, Petta has worked very closely with the man he replaced, and the strength of their relationship is a primary reason he is confident in the association’s continued ability to succeed.

“[Woody] was obviously a terrific leader. He was engaged and energetic. He knew the association business and worked really well with the board and the staff,” says Petta. “I was fortunate to work with Woody for five and a half years on a lot of industry issues, and we had nothing but a terrific relationship. Our working together meshed very well, ensuring that the strategic direction of the organization keeps pushing forward and we deliver on the value proposition.”

Sutton and Petta’s future have been intertwined from the start. As Petta explains, when Sutton was hired, the board of the ELFA had a succession plan ready.

“When Woody was hired over five and a half years ago, the board was very forward-looking in putting in place a succession plan. And low and behold, here I am,” says Petta. “I think the idea was that before they considered anyone else, they would consider my interest in doing the job.”

Even if Petta had been pegged as the next in line, when the announcement was made last February, it still sent some shockwaves through the industry, just as would any announcement of such magnitude. However, by announcing in advance, the association ensured a fluid transition.

“From that standpoint, everyone has known for some months now that it would be a successful transition, and it would be pretty seamless,” says Petta. “It wasn’t like they had to break in a brand new young pup. I’ve been around, and I know associations. I know this one very, very well. The transition has been very, very seamless and enjoyable.”

Challenges and Opportunities

Now the real fun begins for Petta, who leads the ELFA into a new year and a new environment with plenty of challenges and tasks to tackle.
As Petta says, 2015 was a pretty good year for most leasing and finance organizations. Industry growth was solid, credit quality remained high and liquidity was in abundance. As the industry enters 2016, many of those metrics are the same, but Petta knows there are challenges and opportunities on the horizon.

“You might call it a perfect storm of sorts. The association and our affiliate the Equipment Leasing and Finance Foundation are in the midst of building out and executing on a number of important initiatives to meet these challenges and opportunities,” says Petta.

One of the primary issues is the implementation of the new lease accounting rules. A decade-in-the-making development, the rule changes by the Financial Accounting Standard Board will add leases to the balance sheet of lessees, and the ELFA has already done plenty in the ramp up to their passage in guiding the development along and preparing members.

“We’ve employed what we think is a pretty effective strategy in influencing the project by taking the high road. We are always saying to the FASB we want to help them,” says Petta. “We want to engage constructively as they develop these rules and I think we’ve done a pretty good job of doing that. The rules are much improved over where they were when they started with the first exposure draft in 2010 and the follow-on exposure draft in 2013. Similar to US GAAP, two lease types remain for lessees — operating and finance — and the income statement is relatively unchanged. The new rules do not take effect until 2019.”

Now the association must double-down on those efforts, especially as it pertains to fulfilling its mission to educate and prepare members.
“We have a number of activities planned, including a web seminar on February 9, a workshop on March 2, our Lease and Finance Accountants Conference in September and of course our annual ELFA convention,” Petta says. “We will be promoting and pushing out whitepapers and other resources that will tell folks how to comply with the new rules and help members and their customers adapt to them.”

The ELFA is also keenly aware of what 2016 means in a political sense. A presidential election looms, but the association is most focused on governmental mechanizations outside of the Oval Office. Much of the association’s work in governmental advocacy is done through its Capital Connections program, an initiative Petta is proud of and hopes to expand.

“The members that make the time and effort to come and participate in our Capital Connections program come away with, at least they tell us, newfound recognition that speaking with one industry voice and the voice of their organization collectively makes a difference in what gets done in Washington,” says Petta. “We’re hoping to expand on the goal of extending this Capitol Connections program to congressional districts to encourage and facilitate meetings between our members and their elected representatives where they live and work as opposed to just focusing on here in Washington.”

Lease accounting and advocacy have long been on the ELFA’s to-do list. In 2016, the equipment finance industry and its most prominent association must deal with an increasing number of new challenges as well.

First, the rise of non-standard financing arrangements and fintech companies cannot be ignored.

“Whether they’re equipment focused or merely providers of business capital, what is our response as an association?” asks Petta. “We’ve included sessions in many conferences on alternative finance providers, how they augment what our members do, and how they might provide some challenges for what our members do. I expect that will be a big deal going forward.”

Then there is thinking about the next generation. Petta was recruited into this industry early in his career and hopes to encourage young professionals to take up the mantle by way of new initiatives and programs.

“How do we promote lease financing at colleges and universities around the country? We’re going to roll out an academic outreach program, a comprehensive program, that looks at incorporating our guest lecture program — which is a PowerPoint presentation that our members present to universities and colleges around the country — enabling them to spread the gospel of lease financing,” says Petta. “We expect we’re going to be spending a lot time on that going forward.” Finally, Petta and the association are aiming to continue to build a more diverse membership, both at the individual member level and in the leadership of the association. “We certainly recognize that diversity is a good thing,” says Petta. “Our board has taken on initiatives over the past few years to identify women in leasing and finance companies not only at the board level but deeper down in the organizations and to try to get create diversity in the association.”