When Microscopes Meet the Middle Market
Most of my academic and professional career had been spent fabricating superionic and semiconducting materials, building complex mathematical models for technoeconomic analyses of energy systems, constructing strategies for accelerating technology in economically less developed countries, leading organizations, composing music, and teaching salsa… Basically everything—but finance.
So admittedly, stepping into the world of senior secured leveraged lending was akin to parachuting onto a foreign planet. Indeed, the blitzkrieg of hyper-jargonized financial rhetoric was a lot to contend with, at first. But over time, with great study and a ton of help from my colleagues, I’m starting to see things much more clearly.
So what is an engineer doing in a finance organization?
I am helping to build a bridge between GE Global Research (GRC) and the middle market. GE Antares Capital is the leading provider of senior debt to private-equity (PE) owned middle market companies in the US. That is to say, we give loans to support the growth and commercial activities of medium-sized multi-million dollar businesses (the middle market). Through our relationships with the sponsoring PE firms, we have access to a very diverse network of over 10,000 of such companies around the globe – many of which are technology companies. As part of the Capital/GE Global Research team (Rod Bollins, Greg Gratson, Qing Cao, and Robert Brandt), we try to find ways of connecting these companies with our engineers and scientists at Global Research and our industrial businesses.
To make this happen, we originate needs from GE technology leaders, search for companies in our network that are good matches, vet them internally using public information, and bring the two parties together to discuss the range of collaboration opportunities. Partnerships may involve GE buying products from the company, transferring our technology to them to manufacture or commercialize, or jointly developing something new.
When all is said and done, all parties win. Here are some benefits of this relationship:
- The company gains a relationship with GE and, by selling an existing product or gaining access to new technology, should become stronger and more prosperous. After all, most companies do not have billion-dollar research labs supporting them.
- This, in turn, is also beneficial for the PE firm that owns them, as new business generated from this interaction may help grow the company and strengthen its valuation upon exit.
- For GE, this is a great way to accelerate our technological development. By teaming up with such able companies, we can build even better products and go to market potentially with greater speed, more complete solutions, and less risk.
- And finally, this represents another differentiator for GE Capital. With initiatives like these that link to the greater industrial company, GE Capital can be far more than just a bank, offer far more than just money. Accordingly, this may give PE firms an additional reason to consider GE in future financing deals.
Obviously much easier said than done and the initiative is fairly young. But so far it’s going well and the team has generated some great wins.
Again, why am I here?
Having both engineers and financiers involved on this partnership is key to its success. As an engineer with a wide array of training from school and GE’s Edison Program, I can’t tell you how helpful it has been to be able to understand, interpret, and clearly communicate technical issues across different domains.
But far beyond comprehension, being able to independently think through solutions to the needs presented allows me to be more creative and discerning when evaluating companies, thereby ensuring we find the best possible matches. In turn, I get a great crash course in leveraged finance from top professionals in the industry, gain hands-on experience in deal making & underwriting, and have the chance to reflect more broadly on GE’s technology needs.
That’s it for now. Look out for a new post coming soon!