SFNet's Asset-Based Capital Conference was held February 11-12, 2025, at the Wynn in Las Vegas, NV. Now in its 17^th year, it is the premier event for those in the middle-market leveraged finance and asset-based finance world. Attendees walked away with up-to-date market insights from industry leaders, with panels ranging from the current state of the economy and industry, while benefitting from networking opportunities with key decision makers. Here, conference attendee Cheryl Mayo of Haversine Funding shares some of the key conference takeaways.

The Conference kicked off with Keynote Speaker Michael Crome, SVP, Chief Financial Officer, Las Vegas Raiders, sponsored by Gordon Brothers. Crome, in his fourth season as senior vice president, chief financial officer for the Las Vegas Raiders, has more than two decades of leadership experience in accounting, financial analysis and strategic planning, forecasting and business analytics. He was also recently named to the Federal Reserve Bank of San Francisco Economic Advisory Council.

The Opportunities and Challenges in the Non-Bank Asset-Based Lending Market panel featured leaders of several leading non-bank asset-based lenders, including Supremna Cole, Managing Director, Wells Fargo Capital Finance as moderator, and panelists Marty Battaglia, Chief Executive Officer, Eclipse Business Capital; Meredith Carter, President and CEO, Edge Capital; and Mitch Drucker, Partner, Ares Commercial Finance and James Garlick, Head of Corporate Finance, Wingspire Capital, who gave their perspectives on the non-bank asset-based lending market, credit quality, fund raising and the competition with banks.

“Panel attendees gained a better appreciation for the opportunities and challenges confronting non-bank lenders in sourcing and evaluating companies that have migrated away from the commercial bank ABL market,” said Drucker.

Lender on Lender Violence Turns Up the Heat followed. Over the past decade there has been increasing incidences of companies seeking to preserve value and access incremental financing by pitting their various classes of lenders against each other. They have often done this by seeking to exploit various provisions in their credit agreements. With the magnitude of debt that may need to be restructured in the next few years, and the value at stake for equity holders and lenders, the incidence of these “liability management” transactions is likely to increase over the next few years. These transactions will undoubtedly test new approaches in response to documentation changes and legal developments. This panel will explore the major recent trends in these transactions and panelists will provide their best guess on the future development of these strategies.

Julia Frost-Davies, Partner, Greenberg Traurig LLP was the moderator. Panelists included Zoltan Donovan, Managing Director - Tradeable Credit, First Eagle Alternative Credit, LLC; Surbhi Gupta, Managing Director, Houlihan Lokey; Mark Silva, Partner, Choate Hall & Stewart LLP; Tim Tobin, Managing Director, Capital One; and Aparna Yenamandra, Partner, Kirkland & Ellis.

ABCC Capital Markets Extravaganza – 2025,sponsored by Bank of America, kickedoff Wednesday’s panels. This panel of capital markets professionals evaluated the growth of direct lending and discussed other trends and their impact as 2025 begins. Barry Bobrow, Managing Director and Head of Credit Markets, Regions Business Capital, served as moderator and panelists included Maria Dikeos, Global Head of Loans Contributions, LSEG LPC; John Gregory, Head of Fixed Income, Citizens Capital Markets and Advisory; Lisa Hanson, Senior Vice President, Bank of America; and Darryl Kuriger, Managing Director, Wells Fargo Securities.

“Our panelists provided their thoughts on how these markets interact with each other and thoughts on how markets will behave in 2025 and beyond,” said Bobrow.

The How’s Our Collateral Coverage? panel (pictured below) featuredMichele Riccobono, Managing Director, Wells Fargo,  as moderator and panelists Scott Carpenter, Chief Executive Officer, B Riley Retail Solutions; Rick Edwards, Head of North America Retail, Gordon Brothers; Ian Fredericks, Chief Executive Officer, Hilco Consumer – Retail; Michael McGrail, Chief Operating Officer, Tiger Capital Group.

Faced with a complex economic landscape defined by tariffs and shifting consumer behaviors, lenders are facing new challenges. The panelists provided insights into navigating tariff impacts, collateral management strategies, and understanding the evolving role of Intellectual Property, while also underscoring the margin erosion driven by ongoing inventory repricing and other market trends.

Because tariffs drive up the cost of new inventory, they will impact both the used market and global supply chains. This increased cost for new goods will lead to a surge in demand for used goods, which in turn will increase their market value. Clients heavily reliant on imported products and components will experience supply chain disruptions which can negatively affect payments on existing invoices.

Interest rates may not decrease and could rise, impacting borrowing costs and investment decisions. The prospect of sustained or even increased interest rates will add pressure on businesses.

Consumers are prioritizing essentials while reducing discretionary spending. Retail closures are saturating the market with goods, devaluing certain collateral types and complicating recovery efforts. The pandemic demonstrated a shift in consumer buying habits, marked by a sudden surge in demand for home goods, followed by an unexpected decline. This highlights the importance of continuously monitoring changes in consumer demands.

Collateral Management Strategies: Rigor and Adaptability

Mitigating risk is always a priority, but now is the time to be more stringent and watch the collateral mix - especially during workouts. Relying solely on reporting is not going to be sufficient in the current and future environment, meaning the valuations matter. Know where your collateral is, that it matches the description in the reporting, and the counts are accurate.

The panel also discussed that the materiality of shortages matters, and even seemingly minor shortages need to be addressed promptly. They compound and have the potential to create significant shortfalls when lenders are in a workout situation. Discovering the total shrinkage is 20 percent instead of the three percent shown in the reporting can mean the difference between getting out whole or suffering a significant shortfall.

There are certain times in a workout when increasing the outstanding loan makes sense.Taking on additional costs with strategic acceptance of new products to maintain customer traffic may be the key to a complete recovery of the loan. When choosing this path, as the panelists highlighted, remember to monitor potential market saturation or trends which may impact collection efforts.

The Intellectual Property market is tough right now, especially since pure e-commerce has failed after the end of the pandemic. As a lender, know what rights you have. Some of the questions posed by the panelists focused on, “Do you have the right to use the IP address and customer list in a workout?” Recovery without rights can cut recovery by as much as 50 percent.

Another tool used in a workout is by allocating a portion of workout funds for retention bonuses. It is no longer just the managers and should include all employee levels. Approximately 15 percent was considered a fair number when preserving valuable expertise and enhancing recovery outcome.

The Luncheon Panel - Economic and Policy Update, sponsored by Goldberg Kohn, (pictured below) featured an economist and two political consultants, who provided their analysis of the current outlook for both economics and policy under the start of a new administration. Laura Jakubowski, Director of Knowledge Management and Innovation, Goldberg Kohn, served as moderator.  Panelists included Seth Bloom, President, Bloom Strategic Counsel PLLC; Lon Goldstein, President, Goldstein Policy Solutions; and Michael Skordeles, Senior Vice President and Head of U.S. Economics, Truist Wealth.

Beyond specific market trends, panelists shared insights into the broader economic and policy environment. The new selection of banking regulators aligns with traditional choices, mirroring prior administrations. We should expect interest rates to maintain an upward pressure which would have happened regardless of which candidate won the election. The US economy continues to outperform Europe, with no indication this will change soon.

While political pressures persist on the Federal Reserve, economic data will guide policy decisions. All agreed, the concern of a government shutdown was valid and would cause disruption.

This panel went on to discuss the US dollar being recognized for its stability, even with volatility. Because cryptocurrency lacks regulation and there is no way to tax it widespread, adoption is unlikely until these issues are addressed, or a dollar-pegged coin emerges.

The topic of tariffs also was noted on this panel. Tariffs are being employed as leverage in international negotiations. The impact varies depending on the trade partners. The most recent example used was the difference between US tariffs on Canada versus those on China and the results that transpired.

In addition to tariffs, the panelists discussed tax credits noting that industries relying on tax credits are vulnerable to government policy changes. For example, the support needed for steel and iron could negatively impact agricultural exports, potentially requiring substantial subsidies.

Going forward, the key industries to watch include AI, healthcare, and sustainable energy, though policy shifts could impact sustainable energy. Distressed areas include export-dependent industries and agricultural exports. More companies are shifting production away from China, with the US holding demand-side leverage. Brazil faces economic vulnerabilities, while India emerges as a significant player in services and technology.

The discussion included insightful reminders, innovative ideas, and detailed strategies for monitoring collateral to increase the likelihood of a successful workout or avoid unexpected over-advances. Understanding the recent changes in economic and policy shifts helps us prepare for their impact on our industry.

Private Credit in High Gear, sponsored by White Oak Commercial Finance, was the final panel of the conference and discussed the rapid growth, recent structure and fund-raising innovations of private credit, and the overall complexities surrounding private credit as an asset class as it seeks to continue its rapid growth.

“The private credit market continues to be the high growth story of the year,” said Moderator Holly Etlin, partner, Alix Partners. “The panel explored where the market is today and how it is evolving, private vs. direct lending, key issuers and relative market share, securitization and other evolving topics.”

Ted Koenig, President & CEO, Monroe Capital LLC; Curt Lueker, Managing Director and Head of Direct Lending, Marathon Asset Management; Tom Otte, Chief Executive Officer, White Oak Capital Finance; and Jason Van Dussen, Senior Managing Director, Co-Head of Capital Markets, Golub, will round out the panelists.

The day concluded with a networking break and the popular Joint Reception with TMA's Distressed Investing Conference, sponsored by Parker, Hudson, Rainer & Dobbs, LLP, Siena Lending Group and White Oak Commercial Finance.