Andrew “AJ” Johnston joined ABN AMRO last year and has already made waves as the head of our SME sales team. Here, the former leadership mentor and business founder discusses ABN AMRO’s fresh approach to Asset Based Lending.
My background is a little unusual for a head of sales at ABN AMRO. I was running an executive coaching consultancy in the banking world to develop high-performance leaders in places like RBS and Coutts. Prior to that I lead part of RBS Invoice Finance. One of the things that excited me most about ABN AMRO was their openness to bringing someone like me on board – not only to develop a new sales strategy, but also to further develop ABN AMRO as a leadership group.
My prediction is that we will see greater deal activity in 2018. As stigma continues to fall, we’re going to see asset-based lending become the smart choice for entrepreneurs. If I look at last year’s deals, a large proportion was acquisition and management buyouts – as opposed to turnaround and lender of last resort. The climate is changing.
ABN AMRO proactively looks at creating a solution rather than providing a product. We’re looking at a client’s particular challenge, how we resolve their challenges through our proposition and ensuring there aren’t convoluted covenants. When we move away from how the product is put together and concentrate on results, we’re improving that space – and our client’s view of it.
In a world that is changing with increasing speed, every one of us – including our introducers need to ensure that we are meeting the expectations of our clients – indeed perhaps exceeding them. Some will be left behind in the race to adapt and those that try to be all things to all people will struggle to build partnerships with funders. Old-style brokerage networks will be challenged by more sophisticated Advisory Services and Structured Finance Providers in 2018. Asset Based Lenders prefer to work with those who understand a lender, not only for the debt quantum but also for the relationship. The pile-it-high, sell-it-cheap mentality is a relic of the past and we are finding that many of our brokers are evolving accordingly. It’s that old adage – change or die.
Our approach to introducers hasn’t always been perfect. There have been times where ABN AMRO has not been challenging enough in the relationship. It has been too eager to please introducers by accepting an opportunity that isn’t our bag. What we’ve failed to do is challenge back. Any good relationship soars when a challenge is fair, appropriate and positive. I want to increase the propensity of that in 2018.
That said, introducers are an essential part of our makeup and we’re looking to deepen relationships. It’s making sure we share insights, share information and continue to be transparent. We have to keep our eyes and ears open to those potential relationships that we don’t know yet, either because we’re simply not aware or they’re new to the market. We need to be aligned.
From a social media perspective, it’s easy to just post that we’ve done a deal. What we’re keen to do is discuss what we’ve done – for whom and why. If it’s a funding line, rather than say it allowed them to grow, instead say it’s to grow and do what? To support their local community? Increase their footprint? Change the way they approach sustainability? We want to celebrate success for our introducers and clients.
Why is asset based lending the right solution in 2018? Having run a business myself and required funding previously, I understand what it means to have a lender that really understand how you work. To have an opportunity to look at the assets within my business and build a bespoke funding proposition – based on how my business is built, rather than how the funder has to provide it to me – feels like a far more collaborative process.
With the uncertainty of Brexit, it often takes a “leap of faith” to invest further in growth for a business owner and we need to provide some of the confidence that we will back them to do so. Using an ABL type proposition the ability to work off debt as your business grows is key. You can use it for the periods that it’s important to you, rather than having the millstone of a term-led debt stuck over your neck. For me it’s the flexibility, the bespoke nature.
At the small and medium enterprise end we’ve been part of some significant deals, providing the kind of funding solutions that allow businesses the freedom to grow. Part of that success is due to our new introducer strategy, which has increased the number and quality of referrals. Return on investment from private equity is almost double that of a broker as those deals are often well thought out and better prepared.
Our team is made up of real people and with a real diversity of backgrounds, experience and ages and perhaps this is why we we’re a little bit different. We’ve taken on people who have run incubator hubs, people who have run their own businesses and understand why we need to take the time to truly understand each business challenge That’s what ABN AMRO is about – bringing together a diversity of talent to get the best results.