PRO - ACTIVE EQUIPMENT LEASE MANAGEMENT SERVICES
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PRO - ACTIVE EQUIPMENT LEASE MANAGEMENT SERVICES |
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Equipment Acquisition Companies often base leased equipment acquisition decisions on cost alone. However, when structuring, pricing and negotiating Master Lease Agreements and initial lease schedules without thought toward operational requirements, cost alone is a weak measurement. By matching all operational issues and financial constraints to the lease terms, the path toward successful equipment acquisition becomes clear. True Operating Leases provide lessees reduced periodic cash flow with more flexibility and less risk. Finance and Synthetic Leases provide tax advantages through financial engineering. Venture Leasing's emphasis on credit capacity and warrant coverage present unique opportunities. Whichever method is appropriate, a pro-active management plan includes competitive negotiation with all funding sources and detailed negotiation of all lease terms. |
Mid-Term Evaluation Changes in staff, inherited lease obligations through merger or acquisition and ineffective inter-divisional communication: these are all reasons corporations lose track of and fail to maximize the utility of leased equipment. "Outsourcing" the function of pro-actively tracking the evaluation of equipment and economic requirements insures an effective approach. Is this equipment still needed? Does a mid-term extension make economic or operational sense? Should a Fair Market Value analysis be performed to evaluate a buyout? Would upgrading or swapping out the equipment provide more throughput? Has a previous lease extension created an IRR higher than a base line cost of funds? These questions must be considered prior to end-of-lease.If mid-term analysis determines that an early termination/return is in-order, then negotiating with the lessor for relief of remaining rent and less costly return conditions is key. This on-going analysis also prompts upgrade and additional equipment acquisition discussions as business grows.
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End-of-Lease Analysis On-going management is the key. However, if a lease stays in place through the expiration date, a database of all lease terms including expiration date and notice period is essential in focusing decision makers on opportunities. If the equipment is returned, meeting return provisions outlined in the leaseís fine print is critical to avoid month-to-month rent. Moving from "all or none" to "any or all" return language creates operational flexibility. If the equipment is returned, were all of the deinstallation and return conditions met according to the lease? Whether negotiating through a legacy of equipment lease return provisions or aggressively matching the technology and economic issues, pro-active consideration is essential in reducing lease obligations through the end-of-lease. Performance Based Expertise Over a decade of transactional leasing experience provides the foundation to outsource the management of your leased equipment. As an author of several leasing trade journal articles with an M.B.A., significant industry expertise is part of the package. Having held positions with leasing companies in portfolio management, lease pricing, equity and debt funding, equipment remarketing and residual analysis, lessees will have the advantage of inside leasing knowledge. |
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D. R. S H O L E M & C O. 11 Carriage Way, Champaign, Illinois 61821 |
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