Michael Haddad

In this installment of our executive interview series, Charlie Perer sits down with past SFNet president Michael Haddad to discuss the current commercial finance hiring market and his unique, self-directed approach to securing his next leadership role, among other topics.

For those who haven't been following, Michael has been sharing insightful weekly updates on LinkedIn about his personal journey in finding his next opportunity.

Charlie Perer: Thank you for your time, Michael. To begin, can you please talk briefly about your background?  

Michael Haddad:  I went through bank credit training right out of school and wound up in the factoring/ABL group. What a surprise! I travelled the U.S. as a field examiner early on, progressed to the head of the LBO group, then off to London and Saudi Arabia (lots of stories for another day). Came to Texas with NationsBank and six start-ups/mergers, etc. later, billions raised in capital and debt. Here I am – doing it again. I love it!

Perer:  Where are you in the process right now?

Haddad:  It has been a “process.” Wow! I have learned a bunch, indeed. I am working with two solid groups on finalizing a deal. Strange enough or maybe not, they are right where I have always been and started in factoring, ABL and equipment finance.

Perer:  What inspired you to make  your search public for all to read about it?

Haddad:  It was a buddy who suggested I should use LinkedIn. I was very skeptical at first, but he said if I do it, post every week, get Premium and stay active. My ego almost stopped me from this because I thought I knew everyone, and job offers would come flying in because of that so why use LinkedIn? Wrong! Using LinkedIn was the best decision I have made so far. It was a bit scary at first to publicize to the world you are out looking for a job, but once you realize you control your own destiny, not anyone else,  you quickly get over it.

Perer:  What are the key lessons learned in your self-run search to lead a new specialty finance company?

Haddad: Lesson one is there is not a catalogue of senior jobs, start-ups, equity groups with the name Michael Haddad at the top waiting for me. Hiring, raising capital at this point is “opportunistic”. How can I create value? Being prepared and having a plan is the key. Lesson two is that I DON’T know everyone. In fact, it is startling to learn who I don’t know and how they have reached out. Mind boggling help from the “deep’. Lesson three is keep positive and be “consistently persistent”.

Perer:  Have you been surprised by the amount of groups that are looking to enter the space or significantly invest?

Haddad:  Yes, but to a certain extent. The present market is really split more than I have ever seen it into the regulated and non-regulated and the gradations there-of. Most banks are trying to sound aggressive and either say they are entertaining starting an ABL group, but in reality, just don’t because they incorrectly view ABL, for instance, as risky lending when its losses are .50bps over the life of the loan. Other banks I have talked to view ABL as a risk rating one or two worse on the scale, so, in essence, a poor C+I loan. Still, lots of open positions for relationship managers exist.

On the other hand, our non-regulated friends have tons of capital, ready to deploy BUT--- want low to mid-teens yields and low or minimal losses. That’s a tough space for ABL over time and, in my opinion, hard to sustain. I have prepared three business plans around these scenarios and have no finality to them yet.

Perer:  What insights or mosaic do you have about both the bank and non-bank market that others might not have?

Haddad:   Notably, banks aggressively pursued new business as the economy emerged from COVID in 2022. Those three-year deals are up for renewal with YE 2024 financials starting to be released next month. So, for the bank ABL market I think there is a real disconnect that exists in what is being booked and the “market appearance” the bank portrays.

For ABL and specialty finance, the non-regulated market really hasn’t changed – yield focused, private credit driven, tons of capital if the model works. Lots of fantastic opportunities outside of these sectors, where I am focusing now.

Lastly, I think our turnaround friends and consultants are beginning to see a real uptick in assignments and bankruptcies as the high interest rates are taking a toll. More to come on this front, I am afraid. I have been asked by four different groups to join them with a “eat what you kill” model. Not my style, I guess.

Perer:  Where do you personally see the most market white space right now?

Haddad:  I have found lots of opportunities in the factoring, transportation, wholesale and retail mortgage space. The opportunity exists in the lower and middle tier where the equity is seeking to grow, has done well, but just doesn’t know how to grow further without taking undo credit risk. They also might not have the controls and or infrastructure in place. This is exciting and a chance to create value, have fun and build.

Perer:  What’s been the most disappointing part of your process?

Haddad: Finding out how many folks are out of work. Part of this public journey for me was to help folks like me to network and it was an eye-opener, indeed. I have talked with just about every level colleague possible.

We have all gone through the same stuff as well.

I always try to remain positive so I won’t dwell on it, but will mention that none of the following is a new phenomenon– Ghosting, no responses to emails, phony or non-existent job listing, recruiters contacting you in droves that your resume is not in a certain format and would “help” you for $500.00 or so. The list goes on.

Perer:  Has this process changed your view or approach to hiring?

Haddad: Absolutely. It has opened my eyes to taking the time to be more compassionate and listen. Even if I can’t help, I take the call or answer the email. People searching hang on every sentence people use as a glimmer of hope, so my suggestion is don’t lead people on, just be honest about the situation.

Perer: Why do smaller banks seem to struggle reconciling the perceived risk with collateral-based loans with the actual risk?

Haddad:  Great perception.

Personnel of smaller banks had very little exposure to ABL early on in their careers and learned their trade, so to speak, doing CRE and C&I, both very different lending than ABL. Then here comes ABL with companies that have higher leverage, maybe losing money, etc. To them it’s just a poor C&I loan and a headache to deal with the OCC and other regulators. High frequency of default and less severity just doesn’t ring with them. I have found a bank with +-$5B or so in footings is probably a good place to have a true ABL unit with credit policies of its own, etc.

Perer:  How many quality professionals are on the sidelines right now and why do you think it is?

Haddad:  As I alluded to earlier, there is as large a pool of quality professionals on the sidelines as I can recall. In fact, if one of my opportunities comes through, I will have a fully staffed company in 30 days, Unheard of from my view.

I don’t think there is just one factor. I would point to mergers, general cost cutting due to true lack of growth as I mentioned earlier.

Perer:  Where do you see the most hiring activity right now among the various lending constituencies, i.e. factoring, ABL, bank, non-bank, etc.

Haddad:  ABL – Lots of relationship manager spots, some field examiner, very few BDO,  some back office and Ops, but when you split the job market into regions across the country, its slim pickings.

Bank – has the most open spots I feel across the board, but just don’t see the growth. I see BSA, AML, Security, IT etc. True overhead, not revenue generating.

Factoring - Some opportunities in transportation, which I feel is due for a comeback, some staffing as well.

Specialty – Has the most as they are looking at the next great product set or doing what the “fairway guys” aren’t. Exciting place to be. Takes lots of time networking here.

Perer:  What advice would you give to those looking right now?

Haddad:  Stay positive! It truly is hard waking up every day and feeling a lack of purpose, a sense of no direction, a lack of self-worth etc. The telephone is not going to ring on its own. You are not going to get a magic email either. Generate your plan of attack and stay with it.

Perer:  How is regional bank-ABL evolving?

Haddad:  ABL is evolving significantly, especially in the context of regional banks. Regional banks are becoming more cautious due to recent banking challenges and stricter capital requirements. This has opened opportunities for private credit to step in and dominate areas traditionally served by regional banks. Some regional banks are creating specialized ABL divisions that operate like non-bank lenders. These divisions focus on flexibility and efficiency, catering to businesses that need tailored financial solutions. Platforms with AI Logic streamline the ABL process, offering faster approvals and better loan structuring. This technological integration is making ABL more accessible and efficient. How sustainable it is I don’t know at this point.

Perer:  Why is it so hard to hire good BDOs?

Haddad: The age-old question we have always asked. I have had this issue forever, but fundamentally it could be that the successful ones stay where they are getting deals done - period. They are well compensated and aren’t interested in leaving. Everyone else looking has a reason or an event that has occurred. I know what I said is a generality, but I think it’s true.  

Perer: Lastly, tell us something you are worried about that the rest of the market has yet to figure out. 

Haddad:  I am afraid I am not that grand a thinker. Haha.

But will say, I still haven’t figured out if private credit is a “net” positive for the economy, ABL, jobs etc. Not meant as a shot at PC, just worries me.