In May, 2013, Graphic Savings Group announced the company’s name change to GSG Financial as part of a larger rebranding effort to emphasize the company’s expanding commitment to offer financing services to both the vendor and end-user markets in multiple equipment sectors. Equipment Finance Advisor caught up with Andrew Bender, CEO and Kiran Kapur, President of GSG Financial to learn more about the company’s go-to-market strategy and goals as an independent finance company serving two distinct segments of the equipment finance industry.

Equipment Finance Advisor: GSG Financial’s roots trace back to the graphic arts industry – from the days of a family-owned company started by Jeffrey J. Bender – JJ Bender LLC, a value-added reseller of graphic arts and commercial printing equipment, to Graphic Savings Group, and most recently to GSG Financial. How has your company evolved from a graphic arts and printing equipment reseller to a leasing company now covering multiple equipment types?

Andrew Bender: I’m very proud of the business my father started in the 1980s – JJ Bender.  Prior to starting JJ Bender, he was a Xerox salesperson and he identified an opportunity to build and grow a VAR business that eventually became the world’s largest remarketer of previously owned digital presses.

I grew up in the family business and later went to law school and practiced law until 2003. In 2003, I saw an opportunity to take the leasing company JJ Bender had built and create a full service leasing business.  Originally we named the company Graphic Savings Group because we were primarily serving the printing and graphics arts industry. As our business grew, we realized our strengths included a unique level of personalized service and the support our customer base required, so we expanded into additional equipment verticals and began supporting our end-users as well. Eventually we realized Graphic Savings Group – which was doing business as GSG Leasing – wasn’t capturing the full scope of our business, so we rebranded under GSG Financial in early 2013 to emphasize the company’s commitment to expanding its product offerings and increasing its focus on vendors and end-users. To this day, the company carries many of the same values my father created and carried throughout his career – building long-term relationships with our customers.

Equipment Finance Advisor: Over the past year, GSG Financial has issued numerous press releases including the October 21st announcement regarding GSG’s launch of both end-user and vendor finance business units. Please explain the rationale behind the timing of the decision to enter both segments of equipment finance.

Bender: We had an exciting opportunity to take our business to the next level and I realized I needed someone like Kiran Kapur, our president, to help me develop it. Kiran brings to GSG a very diverse set of skills with over 20 years in senior leadership roles driving business growth and transformation, with much of that being within the equipment finance industry. So I will turn to Kiran answer this question.

Kiran Kapur:  As I look at our business today, we are really just formalizing what Andrew has built and been doing for many years. Part of the discussions we had prior to my joining GSG focused on how the business was executing in the marketplace and if the operations were capable of serving both end-users and vendors in ways each segments requires; recognizing both require a strong focus on service delivery and operational efficiency. We quickly realized the pieces were already in place to move forward in both markets. As far as timing goes, I think there’s a comeback happening in the industry, and as the industry continues to strengthen, we see many pockets that are underserved in both market segments. That is where our efforts will be focused.

Equipment Finance Advisor: What types of vendor and end-user relationships is GSG is pursuing in these markets?

Kapur: On the vendor side we focus on relationships with vendors that truly control the entire sales process – those that have direct customer relationships and are perhaps struggling to embed and integrate financing as part of their go-to-market model. Today, major manufacturers and vendors have very well-designed and developed programs with very robust offerings. But as you move down the food chain into the delivery channels, those solutions tend to get watered down. We’ve seen that occur at a greater pace since the financial crisis. We believe there’s a good deal of opportunity to meet a need in these underserved markets within the value chains of many different industry sectors.

On the end-user side, we can be somewhat more opportunistic in the business we pursue recognizing we are developing expertise across certain asset types and classes. We see a big opportunity to grow the end-user part of the business as our footprint grows and we expand our end-user team.  We are in the right place, at the right time in my mind and we do not want to put too many barriers around the business in terms of asset classes, ticket sizes or credit profiles. This would cause us to constrain our business and ultimately not fill the need that is evident in the marketplace. Therefore, we are focused on what the front end of the business needs in order to execute for vendors and end-users, and will continually refine our business model to meet those needs.

Equipment Finance Advisor: GSG focuses on multiple equipment types including Materials Handling, Office Products, Graphic Arts, IT/Software, Mailing/Packaging and Energy (GSG Energy Finance). Do GSG sales representatives work within in all industries (generalists), or are you building a team of specialists in these equipment sectors? Are the sales groups for the vendor focus and end-user focus separate?

Kapur: Yes, the teams are separate and we’ve already started to build them. For example, we recently hired John Hays (formerly with CIT Group) as our senior vice president of business development for GSG Vendor Finance. John possesses a very strong vendor background particularly on what we call “converged technology” – a hybrid of IT, software, communications, multi-media and any number of technologies. Hiring John is a clear example of how we are bringing in experts in particular sectors. On the vendor side, we are looking for people with a clear understanding of how value chains work within an industry sector. And, they must also be proficient working with vendors to enable the sales process to include financing as part of the vendor’s go-to-market strategy, work with them to win and build new programs, and deliver a true turnkey solution to our vendor partners. At the same time we are currently building an end-user team and for this team we are looking for professionals that can bring strong end-user relationships. In the process of developing these new end-user relationships, we expect we will also see opportunities to build some additional vendor relationships. Therefore, we see some feeding and cross-over between the groups, but we will keep some hard and fast “walls” between the two groups.

Operationally, we have implemented process changes in how we service end-users and vendors. Again, the point is that this is not new to GSG as we have been doing this for a number of years. Rather, we are now focusing more on bringing more of the right type of business through the doors. The platform is already in place, but now is the time to fully capitalize on the business we can find in our targeted markets – from both the end-user and vendor side. 

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Bender: To expand on Kiran’s comments, I think it’s also important to note that you will be seeing more personnel announcements on the sales side over the next few months rather than the operational side.  We have a strong operational and leadership team already in place that we can leverage further and run a lot more volume though our company.

Additionally it’s important to note that we don’t see ourselves as generalists. I came from the asset world having grown up in JJ Bender, and we don’t want to play in technologies or assets we don’t feel comfortable within nor fully understand. As a company we are very opportunistic to new business, but we are not going to be everything to everybody. We need to be smart about the opportunities we will pursue. Therefore, we’ve narrowed down our focus in terms of our asset classes into four markets:

• Converged Technologies
• Diversified Industrial – the core industry in this group is material handling equipment.
• Copiers & Print
• Energy

Our largest verticals are Copier and Print and Diversified Industrial. We see converged technologies as a strong growth market for us.  IT, software, audio-visual, security and a number of other technologies are trending toward becoming one packaged solution made up of multiple brands. So we are seeing a convergence of services in these markets that help people run their businesses. By providing a true a turnkey package to customers which includes financing, we believe we will have a significant competitive advantage.

Equipment Finance Advisor: Will Cloud Technology be included in this Converged Technologies focus?

Kapur: Yes, our team has a lot of experience in cloud financing particularly at the vendor level. Part of what we have been working on more recently with some vendors is how to structure the cloud technology offerings within a package so vendors can monetize as much of the stream as possible.

Equipment Finance Advisor: What size transactions is GSG targeting and do you offer tax-leasing as an option?

Bender: Our funding model includes bank lines as well as our own capital which gives us a major advantage over a single financial institution or equipment finance company utilizing one method of funding because our credit box can be much wider. Generally we do not go below $25,000 on a deal, but we also go as high as multi-million deals. As we look at the different vendor markets, we seek vendors that can show us a wide variety of transactions, deals sizes and credit types because we can fund these deals in multiple ways and still service the customer.

From a product offering perspective, we are doing tax leases and capital leases. The majority of our business tends to be Fair Market Value Leases (FMV) and this is where we provide the greatest value as we are a tax player.

Equipment Finance Advisor: GSG Energy focuses on sustainable energy solutions. Please tell our readers about the focus of this specialized group within this market.

Bender: Finding a way to finance assets while simultaneously benefiting for the environment really thrills me personally. So we developed a part of our company to pursue the financing of sustainable energy projects. And we designed it around four core areas:

• Lighting Retrofits
• Renewables
• Traditional HVAC Upgrades
• Building Controls

We have hired people from that world who are very passionate about the environment. This is truly a developing market and often the vendors don’t know exactly what they are looking for, so part of this plan is to create financing options that will help them be more successful.

Equipment Finance Advisor: Where do you see your company in five years and how would you describe your views of the equipment finance industry for 2014 an 2015?

Kapur: We look at this as a journey as we want to be one of the top independent lessors in the next few years. Therefore, we need to be intelligent about how we accomplish this goal and remain flexible in order to capitalize on new opportunities as they arise.

Bender: I’ve gotten more involved in the ELFA over the past few years. I am on the Independent Middle Market Business Council Steering Committee, and also on the Membership Committee. I’m hearing a lot of very bullish feedback from industry people, but there are certainly a lot of concerns as the markets get compressed and regulations deepen. Part of what I am most excited about as an independent finance company is our ability to be nimble, flexible and creative – these are core attributes of our culture.