Would you Do This Deal? PimerMed Products, Inc. Ben Carlile 4-17-16
Welcome back. Last week we presented an opportunity to finance $6MM in production equipment for a medical device manufacturer. We are reviewing the transaction from the perspective of an equipment finance firm (ABC) that was recently acquired by a local bank (FCB). More information here: ________________
Below are simplified highlights of our decision-making process:
First, in checking our Risk Appetite Statements, we found that there is no RAS established yet for the equipment finance subsidiary, ABC. The bank’s RAS does not fully accommodate the types of transactions typically seen by this subsidiary. With minimal direction provided by the RAS, the stage was set for a lively debate within the credit team.
Some argued that Mr Pimer’s recent behavior showed an unacceptable lack of character. ABC’s Credit Analyst noted that Mr. Pimer is 100% owner of the business and his personal behavior is impacting the performance of the company. Mr. Pimer halved the size of the capital investment planned by his daughter, PimerMed’s EVP, and he has taken money out of the firm in recent …show more content…
Pimer has adversely influenced. In the daughter’s view, the company needs to be more competitive. She sees the need to invest in more equipment to reduce costs, speed up production and improve product quality. She also pointed out that a clear succession plan is not in place and there is no contract that binds her to stay with the firm. Should her father become incapacitated or die through an injury or ailment, she feared becoming distracted. She admitted that she is not sure who will own the majority of shares after her father passes. She still has a functional working relationship with her dad but in the past year there have been more disagreements between them. That said, she is confident in her ability to manage and grow the
Welcome back. Last week we presented an opportunity to finance $6MM in production equipment for a medical device manufacturer. We are reviewing the transaction from the perspective of an equipment finance firm (ABC) that was recently acquired by a local bank (FCB). More information here: ________________
Below are simplified highlights of our decision-making process:
First, in checking our Risk Appetite Statements, we found that there is no RAS established yet for the equipment finance subsidiary, ABC. The bank’s RAS does not fully accommodate the types of transactions typically seen by this subsidiary. With minimal direction provided by the RAS, the stage was set for a lively debate within the credit team.
Some argued that Mr Pimer’s recent behavior showed an unacceptable lack of character. ABC’s Credit Analyst noted that Mr. Pimer is 100% owner of the business and his personal behavior is impacting the performance of the company. Mr. Pimer halved the size of the capital investment planned by his daughter, PimerMed’s EVP, and he has taken money out of the firm in recent …show more content…
Pimer has adversely influenced. In the daughter’s view, the company needs to be more competitive. She sees the need to invest in more equipment to reduce costs, speed up production and improve product quality. She also pointed out that a clear succession plan is not in place and there is no contract that binds her to stay with the firm. Should her father become incapacitated or die through an injury or ailment, she feared becoming distracted. She admitted that she is not sure who will own the majority of shares after her father passes. She still has a functional working relationship with her dad but in the past year there have been more disagreements between them. That said, she is confident in her ability to manage and grow the