A Beneficial Vision: Former Marlin Execs Get to Do it Again — the Right Way
by Phil Neuffer January/February 2018
Daniel Dyer and George Pelose worked for years at Marlin Business Services in the company’s startup stage. Although both retired from Marlin, they are back in the game, building out Beneficial Bank’s new equipment finance company.
In 1997, Daniel Dyer helped start an equipment leasing company called Marlin Business Services. Roughly 20 years later, the former co-founder, chairman and CEO of Marlin is back in startup mode, teaming with former Marlin colleague George Pelose to form Neumann Finance with the backing of Beneficial Bank. The new business will be a part of the bank and target a wide array of equipment categories. But Dyer and Pelose are not attempting to build a sequel to Marlin. Instead, they are focused on building the company the right way, from the ground up.
The Right Opportunity
The lure of doing things right drove Pelose back to the equipment finance market following his retirement from Marlin in 2014. A lawyer by profession, Pelose joined Marlin in 1999 while it was still in the startup phase. Now he is getting in on the ground floor with his long-time collaborator, Dyer. But Pelose was not going to jump back in without some assurances.
“I had retired from Marlin in 2014, really leaving the industry and having no intention of going back,” Pelose says. “But Dan, after waiting out his period that he had to wait out, called me back up to say, ‘Do we want to get back on the horse for one more rodeo?’ And, after thinking about it, I said, ‘It’d have to be the right opportunity.’”
Dyer knew, soon after he stepped away from Marlin in the fall of 2015, that he wanted to get back into the industry where he had spent more than 30 years. As he examined the options available, he was drawn toward Beneficial Bank, where he already had established relationships. That led to a few conversations to explore the possibility, and it grew from there.
“The more we talked, the more interest on both sides [grew] to align ourselves in terms of their desire to strategically enhance the bank’s lending in small-ticket leasing,” Dyer says. “So, among our various options was the formation and founding of Neumann Finance.”
Once Dyer was convinced, and Beneficial Bank endorsed the plan, it didn’t take long to get Pelose on board.
“Having that support behind us and the desire to build it for the right reasons, to be an integral part of their lending platform going forward, was too good to pass up,” Pelose says. “It was something that allowed me to work with Dan again and build something for an institution that wants to build it the right way, be time-tested and something that we can be proud of down the road.”
While Neumann Finance is an entirely new company within Beneficial, it is not the bank’s first and only foray into the equipment finance space. With an already-established equipment finance arm under the name Beneficial Equipment Finance, the bank was familiar with the industry. Creating Neumann Finance and adding Dyer and Pelose only enhances Beneficial’s current lending offerings.
“We really like the space. It’s an attractive asset class and aligns very well with our desire to be a small business lender,” says Thomas D. Cestare, executive vice president and chief financial officer of Beneficial Bank. “This is an opportunity to partner with Dan and George, two industry veterans with a great track record of success, really focusing on different equipment categories than our existing leasing company focuses on.”
A Blank Slate
Starting over can sometimes be a daunting proposition, but Dyer and Pelose are excited about the prospect. As Pelose tells it, Neumann Finance has been given a “blank slate” to determine its practices and strategies, while adding to and enhancing the platform and the team that supports it.
“We’re not beholden to older technology. We’re not beholden to older hiring practices. We’re not beholden to developing market strategies that have become legacy processes in many of these companies,” Pelose says. “We have a blank slate. We have our experience to know what we did well and what we could do better this go around. We have a strong balance sheet and a committed parent to help us get there.”
With lessons learned from building Marlin, Dyer and Pelose have been aggressively building out the platform and rounding out the management team, which will continue for the first six months of the company, a period Dyer describes as the startup phase. However, with his experience starting a new company, Dyer can more easily focus on what is most important to ensure initial success.
“With any successful venture, passion [and] energy are important. Focus [and] knowing what your strategy is and also the ability to execute. Our business is a business of execution,” Dyer says. “I’ve been in this industry for 25 plus years, and when you bring excitement and energy to what you do, it’s contagious among your employees and your coworkers.”
Dyer plans on using that collective energy and passion to target small- and micro-ticket leasing, with a “sweet spot” of $250,000 and below, and an average transaction size of roughly $30,000. In addition, the company will be equipment agnostic, much in the same way Marlin was and still is, as the company leverages its founder’s expertise in credit-based lending to execute.
Another aspect that will allow this new venture to get going quickly is the fact that instead of being a “true” startup, Neumann Finance is backed by Beneficial Bank, an established financial institution, which is a major advantage.
“Even though it’s a startup, we have an unbelievable asset in Beneficial Bank in terms of getting us off the ground, in terms of support services and the abundance of talent they have on the bank side, so it’s not actually a startup,” Dyer says. “We’re going to be able to rapidly accelerate where we want to be in six months with their support. That’s truly exciting.”
Dyer and Pelose won’t be satisfied with just being aggressive in the short term. They have a vision of what’s to come and will act on emerging trends to dominate over the long term.
“I like to think of ourselves as visionary. What I mean by that is looking around the bend, seeing where the industry is going and how to compete differently than others. We did that successfully at Marlin,” Dyer says, noting that maintaining service engagement, keeping up with technology and attracting new talent are especially important undertakings. It is the last of these three that he thinks is vital in an industry that is trying to get younger.
For Dyer, the importance of getting younger people involved stems from the need for the “millennial influence” in order to bring in a fresh perspective and new energy. “Also, how they can help us think about engaging our customers. Keeping in mind that many of our customers themselves will be millennials, so getting that new perspective blended with the experience that management brings will, we think, be a winning formula,” Dyer says.
It’s one thing to talk about attracting younger talent with the energy and passion needed to succeed, but both Dyer and Pelose think being connected to an employer like Beneficial will help accomplish this goal. “It’s the fun of being in a startup and having an established entity behind you, backing you. I think that’s going to be a pretty attractive magnet for the talent in this area,” says Pelose, while Dyer notes that the bank is one of the top employers in Pennsylvania’s Delaware Valley.
When it comes down to it, Dyer and Pelose are excited to get cracking in an environment in which they see very few concerns, but plenty of opportunity and upside.
“I’ve been in the industry for quite a number of years with two other players, Marlin and someone before that and now Neumann. It’s a large market, it’s a dynamic market, it’s also what I would call a fragmented market,” Dyer says. “Now there’s been some consolidation particularly with banks the last decade or two, but it’s a really dynamic industry. The dynamic nature of the industry, I think has always interested me.”
Barry Shafran, President and CEO , Chesswood Group Limited
Barry Shafran shares the story behind Chesswood Group’s journey from a Canadian new car dealership business with automotive lease receivables of just $80 million in 1999, to a North American public equipment finance business with a portfolio of $1.0 billion in 2019. He says the one constant and key ingredient in Chesswood’s journey is its amazing team of tenured and committed people.