Call in the six sigma altruists
GE is not just a big lender. Through its diverse manufacturing and service operations the group has also built up vast experience in business processes. So it was reckoned to make sense to offer consultancy to potential clients for free in the hope that their businesses would grow on the back of that advice and that they would then turn to GE to fund that expansion.
ONE OF KRG Capital's companies had a problem. "We invested in a manufacturing company in the southeastern United States," says John Lanier, who is chief quality officer for the $800 million private-equity firm, based in Denver, Colorado. "The challenge was with a process efficiency that wasn't quite where they wanted it to be. They had scrap, which was recyclable, but there were storage issues. Either we would have to make the machinery more scalable and efficient, or we would have to make a major capital expenditure investment."
So the company's executives called in one of its lenders – not to discuss the terms of a new loan or capital markets financing but for some business consulting advice. And they got it for nothing.
There are few lenders that could provide this, let alone be prepared to offer it for free. But this is not a typical lender. It's not one of the commercial banks that dominate the syndicated lending business, or an advisory department of one the investment banks that are lending more. It is General Electric Commercial Finance.