Trusted Diversification

by Grace A. Garwood Sept/Oct 2020
Since assuming the role of CEO in 2018, David Lee and his management team have drastically shifted the originations at North Mill Equipment Finance (NMEF) from $2 million to $3 million per month to $15 million per month in funded volume.

David C. Lee,
Chairman & CEO,
North Mill Equipment Finance

David Lee began his career as an investment banker and evolved into the private equity space, culminating in the management of a large alternative investment hedge fund. In 2012, his investor group acquired Equilease and rebranded it North Mill Equipment Finance, consistent with its sister company, North Mill Capital, which was sold in late 2017. NMEF was recapitalized with Wafra Capital Partners in August of 2018, at which point Lee began devoting his full-time resources to the role of CEO.

Following the Wafra transaction, North Mill expanded its business strategy beyond the transportation sector. “It was my goal to have a diversified portfolio amongst different industry groups and also a diversified pool of credit quality applicants,” Lee says. “Instead of just focusing on subprime customers, we focus on all aspects of the credit spectrum. Thus, our strategy revolves around the diversification of equipment, industry, and credit profiles.”

In addition to commercial trucks and trailers, North Mill finances asset classes across multiple industries, including construction equipment, manufacturing, machine tools, franchise finance, buses and motor coaches. Its largest category in 2020 has been the medical device market.

An ongoing strategy that has supported North Mill’s dynamic growth is a total reliance on referral sources. “We find that referral partners add a lot of value to the transaction and that it’s more cost efficient for us to pay them a success-based commission,” Lee says. This strategy also provides the flexibility to pivot to different asset types and, most importantly, build partnership trust.

Lee highlights management team expansion as another key growth factor. The North Mill team combines seasoned industry professionals with outside parties who bring different skill sets into the equation. Notable new outside personnel include COO Mark Bonanno, CFO Pier Snider, Chief Marketing Officer Don Cosenza and Vice President of Customer Relations Paul Cheslock.

Additional ingredients for growth include a sizable investment in software platforms for finance transactions, moving away from auto scoring and computer algorithms, and offering a “straightforward, transparent, keep-it-simple type of loan term that has helped our referral partners sell our approvals over our competitors,” Lee says.

In response to COVID-19, North Mill has provided some level of reduced payments, modifications and/or restructuring of contracts to roughly a quarter of its existing customers. The company also started requiring three months of bank statements and a COVID-19 questionnaire to be completed in order to look deeper into each business.

Due to the unique nature of the pandemic, Lee is reluctant to label the company’s experiences as “lessons” to be learned. “The key is 1) look at the overall big picture and try to factor in what’s the best risk reward answer that you can decide upon based on limited and uncertain information and be methodical about it, and 2) be proactive with your lending institutions. I’ve always felt more comfortable with lower debt leverage as compared to our competitors as it provides greater flexibility during uncertain times like today,” he says.

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