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SFNet Women in Secured Finance Conference Addresses Strategies for Navigating Economic, Professional and Personal Change
August 9, 2023
By Kathleen Currey
The SFNet Women in Secured Finance Committee planned and hosted a thought-provoking conference on June 14 and 15 that afforded women in secured finance an opportunity to explore strategies for navigating economic, professional and personal change, while also providing ample opportunities to network with other women in the finance industry. This day and a half conference started with a welcome reception at Paul Hastings the evening of June 14, followed by a full-day conference on June 15.
Laura Glass, chair of the Women in Secured Finance Committee and senior vice president and East Region senior portfolio manager at Bank of America, kicked off the conference and noted the positive change that she has seen over the years in the engagement by women in SFNet. The number of women involved in SFNet leadership committees and conferences has grown exponentially in recent years. Conference attendance grew by 10% this year, with almost 200 attendees. Conference attendees included people at all stages of their careers, from emerging leaders to senior executives, which facilitated excellent discussions and networking opportunities.
Fireside Chat with Suzanne Yoon
Sabrina Singh, a member of the Women in Secured Finance Committee and senior vice president at Bank of America, led a fireside chat with Suzanne Yoon, founder and managing partner of Kinzie Capital Partners, a Chicago-based private equity firm that invests in lower middle market companies in the manufactured products, business services and consumer industries. Yoon is an Executive Scholar at Northwestern University’s Kellogg School of Management and in 2019 was recognized by The Wall Street Journal as a Top Female Dealmaker Shaping Private Equity’s Present and Future. In 2020, 2021, 2022 and 2023, Mergers & Acquisitions named her one of the Most Influential Women in Mid-Market M&A. Chicago United named her one of their Business Leaders of Color in 2021 and, in 2020, Kinzie was recognized by the Private Equity Women’s Investor Network as the North American Female Founded Firm of the Year.
After a long bull market, Yoon commented that one of the challenges companies face today is that many younger professionals have not experienced a downturn. In a high inflationary post-pandemic environment with increased interest rates, companies must get back to fundamentals and address operational issues. She believes in building in downside protection and said that in this environment a $15 Million EBITDA company cannot handle four to five times leverage. To that end, she is seeing more equity cures and more creativity in structuring deals.
On a personal note, Yoon noted that early in her career she sought mentoring from senior women in the finance industry. She received excellent advice to invest in her career. As a woman and a minority, and understanding the very competitive environment for capital fund raising, she strives to out-perform the market in order to maintain market support and to control her own destiny. As a mother of three, she is keenly focused on hiring great help for her children and outsourcing everything but love. When she is not working, she is not doing anything that does not communicate that love. In terms of self-care, Yoon meditates each morning, believes quality sleep is really important and exercises regularly. She stressed that your community really matters – a pack of wolves is much stronger than a single wolf – helping each other is key.
When asked about her long-term goals, Yoon said that her ultimate goal is to beat the market, and she thinks the key to that success is her team. Her aim is to build a strong and inclusive culture. She concluded by stating that talent is equally distributed, but opportunity is not, so you cannot take your foot off the gas or someone else will get there faster.
Managing the Current Economic Cycle
Kathy Bell, a partner in the Global Finance Practice at Paul Hastings, led a panel discussion on managing the current economic cycle. The panel included Liz Sarhaddi-Blue, managing director of Gordon Brothers; Caitlin Sanders, managing director of Callodine Commercial Finance; Alison Franklin, shareholder of Greenberg Traurig, LLP; and Lynn Whitmore, managing director of corporate originations at Wells Fargo Commercial Bank. The views expressed by the panelists were their respective individual views and not the views of their institutions.
With bankruptcy filings up 23% in the year since May 2022 and commercial bankruptcy filings up 31% in the same time period, the panel discussed how companies are navigating this cycle. Whitmore commented that many companies have learned from the last cycle and today banks often are focused on capital preservation. Sanders noted that there is still a lot of capital to be deployed by non-bank lenders and, although she has seen some pullback from banks, in other situations banks are being much more aggressive to preserve current relationships. Sarhaddi-Blue stated that government loan programs during the pandemic may have artificially propped up some companies with operational or management issues that were independent of the effects of COVID and, because of supply chain issues, many companies overordered. This is beginning to normalize in 2023. Franklin noted that the current cycle is very different from 2008 because the financial system is healthier, and the government bailout in 2020 was much more massive.
Sanders noted that one lesson to be learned in this cycle is to be patient with borrowers if they are being smart about preserving cash because appraisals during this period may not reflect longer-term values. Professionally, Whitmore commented that this is a great time for younger professionals who have not been through a down cycle to “be a sponge” – ask a lot of questions and be active in the process of analyzing problem loans. Also, focusing on the fundamental goals of each party to a loan and keeping perspective that this is a cycle that will pass is key.
In discussing how to originate deals in this market, Sanders noted that you must be a problem solver and understand your place in the capital structure. Whitmore stressed that consistency throughout cycles resonates with clients and that it is important for an institution to be committed to the ABL platform and not run from distress. She also stressed that this is a time to create unique solutions. Franklin noted that as a restructuring professional both internal and external marketing are important so that as problems arise, you have already built relationships that will be beneficial during the cycle. Sarhaddi-Blue agreed that building relationships is key. Working with healthy businesses day to day early on allows you to be proactive to offer solutions as the needs arise.
In terms of opportunities over the next six to 18 months, Sanders anticipates more FILO requests, as opposed to M&A. Whitmore sees opportunities in the direct-to-consumer market and cash-flow deals migrating to ABL. Both Sanders and Whitmore stressed that making decisions quickly is key, even if the answer is that your firm cannot proceed with the requested financing. You can use that process as an opportunity to build a relationship over time. Whitmore also encouraged lenders to look at macro trends – during the pandemic furniture, houseware and building products were up, but that is no longer the case. Also, in the retail space, look at the foot traffic in specific types of stores to understand macro trends and pay attention to companies that are investing in technology including inventory systems.
The panel discussion then pivoted to advice on how junior members of a team who were not in the workforce during the 2008 financial crisis can contribute during the current cycle. Franklin encouraged them to do their research and take ownership in order to be prepared to advise the client. Sanders encouraged junior members of teams to “raise your hand” and stated that the only way to get experience is to have a seat at the table. Whitmore encouraged team members to take what they already know and build on it. For example, junior team members should sensitize the financial model to project what would happen if performance is worse than expected. Sarhaddi-Blue encouraged folks to show up physically, participate in discussions, and show your manager that you are informed and engaged.
In discussing ways to help inexperienced borrowers, Sanders says that open communication is key and that sometimes it is beneficial for a borrower to hire a consultant to help with reporting because many companies are too lightly staffed to handle distress. Whitmore stressed that it is important to listen to what the company has to say and help them focus on what you think is important. Honest communication is key. Being clear, but not harsh, is more effective. Franklin also stressed listening to management and said that sometimes it is important to take a step back and offer some basic training on bankruptcy and restructuring, if needed. She said weekly or bi-weekly calls often also are helpful.
Bell next led the discussion about how women can support other women in the industry. Sarhaddi-Blue stressed that you must invest your time and energy into fostering relationships. Inviting other women into your network, making sure they are included in events and being a sponsor are other ways to support women.
U.S. Economic Outlook: Still Flying, but Losing Altitude
Sarah House, senior economist and managing director at Wells Fargo Corporate & Investment Bank kicked off the afternoon with an informative presentation on the current U.S. economic outlook. Although the consumer price index in May was down to 4% compared to 9% CPI at the same time last year, House believes it is still too high and core CPI in May remains stubbornly high at 5.3%.
A slowdown in the auto and energy sector has led to the decrease in inflation. Travel and food sectors also are coming down, and housing is probably peaking, but other services have not shown improvement. Normalizing supply chains will help, but the tight labor market continues to fuel inflation. Although cooling, demand for workers remains elevated. Drilling down into the labor market supply, House noted that anemic growth in the working age population suggests longer-term headwinds to labor supply.
The Federal Reserve’s tool to combat inflation, raising interest rates, is blunt, but thus far the economy has been resilient. House believes that the Federal Reserve is nearing the end of its tightening policy, but she does not expect to see cuts in interest rates without a decline in activity and a material increase in unemployment rates. Ultimately, although endurance of hiring and spending means a recession is not imminent, House thinks we will see a downturn in the U.S. in early 2024. The decreasing leading economic index supports that prediction. Commercial and corporate bank credit has tightened in recent quarters, while businesses are losing their appetite to invest. Households have been relying on pandemic era savings and debt to fuel spending, and credit availability and quality in the household sector is deteriorating. While House is expecting a recession, she does not expect a downturn to be as severe as recessions in most recent memory.
House wrapped up her program with a presentation on women in the economy. The early part of the pandemic took a harder toll on women’s participation in the workforce (relative to men, although it also took a toll on men’s participation). Although improving, we still see women’s participation in the workforce below pre-pandemic levels. In addition, a lack of reliable, affordable childcare is a headwind. While 94.2% of men with children under six participate in the workforce, only 66.8% of women with children under six participate in the workforce. With that said, the employment of women in their prime working years has never been higher at 75.5%. The rise in single (particularly never-married women) is boosting women’s overall contribution to the labor force. The pay gap between women and men remains stubbornly high and occupational differences explain only a part of the wage gap.
Breakout Discussion
The conference concluded with two break-out sessions focusing on navigating changes in the way we work. There was a lively discussion about best practices for working in a hybrid work environment with lots of different ideas about how to manage effectively and grow productivity in the post-pandemic workplace. The discussion also focused on strategies for self-care in a changing working environment.
SFNet would like to thank the WISF Conference Planning Committee for their hard work and dedication to making this event successful.
Planning Committee
The Women in Secured Finance Planning Committee was chaired by Laura Glass, Senior Vice President and East Region Senior Portfolio Manager at Bank of America.
Other members of the planning committee included:
Denise Albanese, Client Relations, Cost Reduction Solutions
Nahal Bahri, Associate, Corporate Development, Paul Hastings LLP
Betty Hernandez, Executive Vice President, Chief Credit Officer, SLR Business Credit
Randi Hershgordon, Senior Vice President, Gibraltar Business Capital
Stacy Hopkins, Of Counsel, Corporate Development, Paul Hastings LLP
Eileen Kowalski, Senior Vice President Business Credit, National Recurring Field Exam Manager, PNC Business Credit
Aliah Lalani, Managing Director, COO, Hilco Diligence Services
Valerie Mason, Member, Otterbourg P.C.
Guelay Mese, WISF Committee Vice Chair and Head of Asset-Based Lending, BNP Paribas
Lauren Murphy, Director, Wells Fargo Capital Finance, Retail Division
Stacy Odendahl, Director, Business Development, Wells Fargo
Bethani Oppenheimer, Shareholder, Greenberg Traurig LLP
Daniela Piemonte, PNC Business Credit
Kimberly Ptak, BMO
Caitlin Sanders, Callodine Commercial Finance
Sabrina Singh, Bank of America