Interview with North Mill Capital's Jeff Goldrich
By Eileen Wubbe
TSL Express caught up with Jeff Goldrich, president and CEO of North Mill Capital (NMC), on the lender’s recent acquisitions. North Mill Capital acquired two factoring companies in 2019: Sage Business Credit, a Minneapolis, MN-based factoring company and Salt Lake City, UT-based Summit Financial Resources, in June 2019. Goldrich discusses what the acquisitions mean for North Mill.
TSL: Let’s start off with North Mill Capital’s most recent acquisition of Sage Business Credit in December 2019. Why was Sage a good fit?
Jeff Goldrich: Sure. What’s important to know is that in 2011, we acquired a company called PrinSource Capital Companies, an asset-based lender and factor in Minneapolis. One of the significant shareholders of PrinSource, Karen Turnquist, was a significant shareholder in Sage and, almost to the day, we purchased that portfolio from her also.
We bought PrinSource in 2011 and then she started another business and we bought that company, Sage, in 2019. Our team in Minneapolis, which was the legacy PrinSource team, stayed in close contact with Sage and that’s how we were fortunate enough to get it. Sage was an entrepreneurial factoring company local to Minnesota owned by Karen Turnquist and Cathy Sedacca. We have a very robust factoring business in Minnesota and Wisconsin, among other places, and so this was a natural fit for us.
We hired an account executive, John McDonald, who was in that role at Sage, in our Minneapolis office and we were fortunate that he decided to join us.
TSL: Sage wasn’t the only acquisition North Mill had in 2019. Let’s discuss Summit Financial Resources.
Goldrich: We acquired Summit Financial Resources in June 2019 and it did several things for us. We were introduced to the Summit opportunity through Tim Stute, managing director, head of Specialty Finance of Hovde Group. It added loans and factored clients to our portfolio, and it added an origination force of five high-performing business development officers and a sales manager, so that was extremely helpful.
It also opened an office for us in the western part of the country, and that is also important to us because we have two business development officers in California, and one business development officer in Arizona. So, to have a western credit presence, whether it’s handling existing accounts or underwriting new business, is very important to us.
TSL: What are your thoughts on consolidation in the factoring industry?
Goldrich: I think that there’s always been a pretty robust market to purchase factoring and asset-based lending companies. There are times when it’s more active than others. But it’s always of interest and desirable.
There are asset-based lending companies out there that want a factoring platform, and it’s always good to buy one that’s in place and proven. It is always good for factoring companies that have the money to buy something else, as we did, to add to our organic growth.
Putting loans on organically is the best way to do it, but you’re always fighting runoff. So, to have the advantage of acquiring a portfolio and a business in one fell swoop can be very advantageous, if all the economics make sense.
TSL: Would you say there is increased opportunity for smaller sole proprietary factoring companies for acquisitions?
Goldrich: I think that there is plenty of opportunity to sell factoring and finance companies. It’s not hard to find a seller and a buyer. What’s difficult is what a buyer and seller agree to as the price. Usually it takes some expert advice on both sides.
So, there’s always opportunities out there and then it’s a question of what’s the right price. Sometimes it can be a larger premium or a smaller premium; it depends on the buyer, on the seller and what’s motivating the seller and how hungry the buyer is.
TSL: Is it easier to go about acquiring a factoring company to build up a portfolio rather than dealing with competition?
Goldrich: Buying something allows you to, presumably, get something bigger at one time that adds onto your organic growth. Both are important, but in an ideal world you wouldn’t buy anything, you’d just add loans one at a time.
But there are good opportunities out there to buy things so they’re both important. If growth and adding good assets are the goal, both can be very advantageous.
There are opportunities out there throughout the country and beyond and I don’t see that drying up. There’s always buyers and sellers.
TSL: Are there any more acquisitions that you’re foreseeing this year or in the next several years for North Mill?
Goldrich: We’re acquisitive to the extent that it makes sense to us, so we’re always interested. But we don’t count on that. Our business model is built on our business development officers originating opportunities and us adding them one at a time. And, to the extent there are opportunities for us to acquire businesses or portfolios, we are very interested. We’re interested in the teams that are out there whether they’re credit or new business. That’s always of interest to us.