A true lending partnership involves time invested getting to know each other’s business, establishing short and long-term goals, and identifying a strategic financial vision for the future.
To share the differences between working with a traditional versus asset based lender, we sat down with Mark Larson, CFO of Global Value Commerce (parent company for golf e-commerce web channels such as GlobalGolf.com, 3balls.com and FairwayStyles.com), to learn how a business heavily influenced by seasonal sales fluctuations, supply chain disruptions and consumer behavior navigated the lending partner selection process.
With a brick-and-mortar presence, a consumer experience side, a rapidly-growing e-commerce presence and an expanding warehouse, Larson provided his take on how GVC came to partner with GBC. He also shared what other CFOs should consider in their decision-making process, and what he’s learned in the two-and-a-half years since choosing Gibraltar.
How did you come to work with Gibraltar Business Capital?
We’ve been in a rapid growth phase and in recent years we’ve continued to reinvest in our business. Traditionally, that growth hasn’t always been linear. It became increasingly clear that the traditional lending environment didn’t have the flexibility we needed to be able to manage the various cycles of our business.
We were looking for a better financing solution more tailored to our business than the traditional senior banking lending relationship. We partnered with Gibraltar in late 2019.
Based on all your experiences, what would you say to other CFOs about when to consider asset based lending?
When managing the unique cycles of a business, there may not be a straight-line growth pattern. There may be ups and downs and especially when there is a seasonality component, like with our business, for example. Additionally, outside factors such as a global pandemic can challenge the predictability of your working capital needs. ABL’s financing model has more flexibility in these scenarios. When you’re focused on growth and really trying to be on the leading edge of the e-commerce boom like we’ve been, it can create fluctuations and challenges managing working capital. Variability in consumer behavior, seasonality and ups and downs in sales — all of these things lend themselves to an asset based lending solution.
What would you recommend to others about how to choose a lending partner?
In our case, we were looking for a team that dug in on the front-end to provide us with a proposal that was responsive to our needs. We were not interested in having a “one-size fits all” proposal. We looked for a proposal that really indicated they had done their homework and understood our business and our unique financing needs.
We wanted a team that could be responsive to our immediate needs, but also one that could be flexible and willing to work with us as things changed. Through the course of this process, Gibraltar invested more heavily than anyone else from both a time and resource standpoint. They spent the time necessary to understand the industry and ask enough questions to show they understood how our business fits into the traditional or non-traditional portions of retail.
How is working with an asset based lender different from working with a traditional lender?
In my experience, a good asset based lender views the relationship more like an equity investor – a partner. They are interested in the vision of management and the outlook for the company – and how that translates into protecting their investment. They also investigate how they may expand that investment, not just for the good of themselves but for the good of your company, too.
What has stood out to you about your experience working with Gibraltar?
What’s interesting to me over the two-and-a-half-years working together is that their team is entrepreneurial and innovative. The team we have takes the time to understand what is going on in our business and what’s changing, and how they can be part of future solutions. They don’t overreact to changes in the business. They’ve recognized that they can be a vital part of our future growth.
During the due diligence process, the team represented that leadership would stay involved as needed and that they would have a very transparent process for decision making. That process has been exactly how they’ve operated. They provide us access to whoever we need in their organization to make sure our needs are met and that our business challenges are understood.