Sign Hawaii Banking Memorandum Of Understanding Myself

Industry sign banking hawaii memorandum of understanding online

hi folks welcome back to just ask George David Wolfe here with the one and only had two George Lovato junior and my vice dude and co-partner copilot and crime here on the internet media crimes this is a we have got a great segment for you is there money out there joining us who's joining us today Terry suit in north Florida Jacksonville is there ever been a song written about Jacksonville Terry well not necessarily a magical but Lynyrd Skynyrd was from here so you know all the revolt will take that will take that works Terry's one of the long-standing affiliate bankers of bh capital and the reason for this segment is their money out there is to sort of bring in what Terry's unique skill set has been in the participation of the 24 bankers working with bh capital all the affiliates around he has a several unique approaches a very unique way in prosper tchas prospect prospect management yeah and i wanted to get him here with his experience in the grocery industry in finance and retail and in order to finance retail you've got to have that background in retail you have to know manufacturing have to know agriculture you've gotta know distribution and that's precisely what he brought to the table when he joined bh capital was and and in a structured finance for retail he did a lot of it for one of the largest grocer distributors in the world actually and we've become great great friends over the years but I Justin truly enjoyed his approach in business development prospect management and and scrubbing a deal down Terry tell us tell us how you do it how do you scrub a little you know you know you know we'd grab this thing down just like you a home you scrubbing those vegetables then you can make sure you get all the dirt off that will we do when we talk about scrubbing the client down is initially what I like to do is take a to have an outline or either a condensed business plan from define the kind of kind of understand what the project contains once I've received that reviewed that I come back with questions sudah client to ask that client directly you know what what and why does he think that the project would be success and what does he see us risk that the project would not fit success so let's let the client may make determinations of what what his expectations are and what would prevent him in making those successes also once that's done I then gotten through that point I'm scrubbing it down I asked for financial information personal financial statement I want to see then what the capabilities of decline are and what those experiences are that he has once we've conducted all that and we didn't go into discussion about creating capital formation and structured financing what the role of bh capital is we did send out what we call an mou which is a memorandum of understanding soda client then under 22 folks for the client to understand what to expect from BH capital in us to understand what his project is really about and it's all real general terms and conditions is not anything set in stone and it's a non binding agreement once we have that we have that in hand we get that back signed by the client we then contact bh capital in a conference call when week we all decline bh capital in myself week we then feel like we didn't have the tools put together to make an understanding of whether or not this is a project that fits with BH capital and or if pH capital fish with the client next that's uh all did that's great stuff that that really sort of caps Eliza's he kind of keeps a pace of moving the prospect through the process or in some cases they're not ready for prime time so he doesn't move them through it it is his opportunity to really drill down and understand whether it's our kind a deal it's our kind of prospect if this is really going to be the client we're looking for and that's what that conference call is all about and it's to determine whether or not they're the perfect client and yeah it's really important and is there a perfect client or if you had to describe what you're looking for a Terry suit in terms of a perfect client what would that be well there's no such thing it's perfect anything I don't believe that sure I think you can you can narrow that down to where you feel comfortable and I want to bring something one thing back George or stop talking about me being in the supermarket industry for so long on the average it took us 17 called seven visits getting in front of clients 17 times to get him to switch from an old supplier to us so it's a process of going through that Skirving down period but a perfect client has experience and the project that he wants to see offended he also has scanned in a game which is a hard-earned capital cash or other assets and collateral that he can put into a deal and they also understand that the banking world has changed tremendously in the last two or three years and they're open-minded to looking at what bh capital can bring to the tag or in any assisting with that formation of capital fantastic you know recently we've had some discussions with a you of terry's prospects and they basically these are a few case in point have been around and on his radar in his pipeline for well over a year and in what terry has done is he's he's let them sort of move along go out there and and and drop their tentacles into the marketplace and in doing so he let them find out that there really are limited roads to forming capital and so his most recent calls have been so how's that working out for you right right because if you're the first stop for a prospect terry they may just have to go through a self-discovery in order to really believe that what you're telling them is indeed so absolutely correct absolutely green he does a great job of that and most recently you've you found an article which talked about the bh capital business model and this is what Terry does a great job at explaining to prospects what we do you might talk to this article i think it was out of CNBC online and it talked about well the movement towards structured capital the idea that there's a lot of activity particularly below 20 million in terms of transaction size and then also this concept of syndication and participation Terry if you would tell us what that means to this business owner that you love her approach both indication syndication has been around for a long long time people just didn't realize that that's what it was called and that and that that simple form is going to your local bank and working with SBA but the syndication is is basically taking they deal in using two or more parties to consolidate make the deal work so in what we do is is we assist in putting it together that syndication to make it work you know there's there's there's different different ways of forming that capital one of the things that the client can do and we talk about is they can go to their local bank but that's kind of expensive you know they've got to have you know twenty to forty percent down on putting into that pet project along with a no third-party fees read you the they can also go to private lenders or hard money lenders but those again you know they got a lot with a lot of money down into the into the project and they also going to have to pay rates and terms that are not conducive into being successful the third way of course is doing some some kind of syndication through Wall Street investment banking group so merchant banking groups but a lot of times that's so expensive also because they're going into taking anywhere upwards to ten percent of a deal and plus maybe some warrants of a couple percent so they've got I mean that the cost of just forgiven or small individual company and I think the client sent me I understand that you don't be a fortune 500 company to be in the syndication there is for that million-dollar client to that 20 million dollars there is a way of being able to do the same thing but be very very cost effective and that's that's looking at a syndication to using be a it's actually it's actually sort of interesting in that that article really drilled down into the fact that banks are mitigating their risk by doing this you know Wall Street has always syndicated or participated its transactions there were very few even when i took my very first company public there were probably 60 different participants in that syndication and that was a small two and a half million dollar deal in its first phase so it's been around forever banks are realizing they could mitigate their risk but the cost of going down that path utilizing a tried-and-true wall street method is expensive okay you've got ten percent commission as terry said you got two percent unaccountable you have fifty to one hundred and twenty-five thousand dollars as a front end loaded third party retainer for expenses for the Wall Street firm their legal their accounting their third party that they want to their third party opinions that they want inclusive in the deal and so by the time you're done your cost of capital you're looking at something in the neighborhood of you know twenty five thirty percent that's not unusual including now if you add a little debt on that then you've got an interest rate that you know has to be attractive so you add that onto the cost to capital it starts to get expensive you go down the path of a commercial bank you've got to have a big stake in the game you're going to have to have a big down payment to finance that that you know twenty forty percent is terry's saying plus a lot of banks now are an accepting application serious large applications without having an earnest deposit on the application in some cases in almost all cases it's refundable but there's such a narrow scope as we're experiencing now in what they will do by themselves in syndication there's a much broader scope but I think we we probably need to clarify that for people that if they're standing alone inside a transaction the bank has a product and they'll stay inside the you know the the four corners of that product in syndication it loosens things up a little bit yeah because you've got more freedom for for a structured approach that it's probably way outside that box mhm and this could include equity and debt right guys exactly a banks not not equity although banks from time to time and we've seen it over the decades we've been in the business will participate in equity I can go back in time to actually a grocery deal Terry was it was called the bag and safe concept and where you bagged your own groceries i'm sure you remember that interesting and all of those stores were financed by a single bank but as an incentive to finance all that real estate and i think they had some like 20-some stores at one point the bank took an equity position along with being paid for the use of its money interesting so if that happens but that's not every day but but if you're neat you know in some cases Terry will bring a deal and I'll say gee this looks like a great deal but it needs an equity strip right and right you know how many times we see that where the deal is just a little thin we see that a lot doesn't mean it's a bad project which means that we need to massage it with decline and let them understand when we're talking about expertise not necessarily that they put up that equity dead equity stripped may come from an outside partner that maybe it's a limited partner with someone taking taking him to the client taking him out down the road that's a huge distinctly it means a lot absolutely absolutely and I think that's the biggest thing that a lot of the pints in the past they did not they haven't been as sophisticated as you are today they've got like that there they don't want to lose that control it's their project sure yeah there and light we can get into all the ways they can't control the deal but regardless of how much cash they have in or not an inequity equity sometimes putting in an equity strip enhances the deal mitigates the risk there's things that you can do with the equity creating principal and interest reserves on the debt portion of the transaction yeah just adding liquidity to supplement working capital needs a lot of different things can happen with that but it's important for clients to know sometimes some deals just can't use a hundred percent debt and that's what structured finance does is analyzed that process plug in those solutions is to the benefit of the client that they don't normally see because they just don't understand that game and that's essentially what our business model does we bring that we plug that that's plug-and-play expertise that we can typically stick in the in the process Terry tell us a little bit about what you're looking for in 2012 the type of types of clients you're looking for the types of deals are looking or and tell us a little bit about your process in managing your pipeline and some of the things that kind of get your blood flowing well I really honestly thank 2012 can be a great year for for us at bh capital for a lot of reasons one is i think that we would the the prospects that are out there they've weathered the storms over the last couple of years they understand now that they can't go to the local banker soil we've plowed through and we did out the weak ones that just won't compromise at all so I feel like that we've got a good variety of funds that that we're working with right now that are in retail that are in manufacturing that are in real estate back transactions that that really and truly end up being good good solid projects for 2012 I think that now that they see the market maybe turn around a little bit but they know again you know that they need assistance with with that structure they understand that it's just not you know oh no way if I cancel it it's a car and it ran great but it you know it's a TI ran its course the old banking system has run its course but the tried and true syndicate syndicated transactions have been going along along for many many years it's proven it works so I think that our client base that we've got we've got on the radar for 2012 they understand that fantastic one test weight stuff today see this was good for you because you're able to hear it from one of the season guys we've got some guys that have been with us over 15 some approaching 20 years Terry's we're all contemporaries age wise some of the guys are older than us Terry's method is is a very dynamic yet it's progressive and it's been progressive in that he's been adapting to the changing marketplace unlike you know some a couple of my old salts who you know still kind of going down the path using syndication participation structured finance but in terms of business development and client development terry has a pipeline I think that's well over four billion yes total right now and it's constantly growing 2012 i would i would anticipate that his pipeline will grow too well well over double that and that's a testament to his his management system it's very very very good and he knows when he sees a good deal and i appreciate all the hard work he does well you know you know as the farmers you know they have to cultivate they have to so that so that feel compile that feel no you win old saying in a very strange tree yet to grow a go and that's what you have to do is you have to increase that pipeline you always have to be looking down the road six months and twelve months down the road because what you want is is that pipeline to continue moving forward you want to move those customers that six months ago weren't quite ready you want that if those to start cultivating and start being ready to close and then you've got I don't always always in line right and it's important to know for those listening who are probably the business owners seeking capital that that's a process that we respect and honor and their deal may not be your deal may not be ready right now but work with us and work with Terry to do that cultivation process and and and go out to the market and successor options are and have an informed view so when you come back to us you'll understand what coaches bingo Jerry thanks for your time today we we carved you out of that good Jacksonville whether we're down here in the 20s and 30s you're up there close to 0 degrees we know that you've got your shore it's your Bermuda shorts at the ready in case the temperature suddenly Rises and will stay here with our long sleeves and our ads and cups will be visiting soon I understand but 60 air North car it is winter time okay Oh Carrie thanks so much for joining us folks it's just ask George tripled oudh capital ltd com for more information about all things structure contract requirements and beyond thanks Terry bye bye