Recently, I was informed of a rumor that someone in the operating leasing fraternity was telling lessees that if they hired an advisor, he wouldn’t work with them. Initially, I didn’t believe that anyone would make so blatant an attempt to restrict trade in our industry, but you see, I’m one of those people who believe that where’s there’s smoke there’s fire.

First I asked myself, why would anyone make such a threat?

On its surface it looks like he or she would have to be saying:

“I don’t want you to have professional advice when we bid and negotiate your deal.”

That just didn’t make sense.

Then I thought about the current red hot market for finance leasing deals of 8 years or more where the lessee is a well-rated credit. If you are such a lessee, you can hit the bank lessors’ “sweet spot” and end up with a monthly rental that is hundreds of dollars less per month than a comparable quote from an operating lessor seeking to compete in a market that the banks now dominate.

Most of the operating lessors I have discussed this with concede that this (8 to 12 year leases to top credits) may just not be a market in which they can compete effectively at this point in time. Their strong suit has traditionally been 1 to 5 year leases, particularly full service leases, where the banks just won’t go. However, I can see how as sales guy in the field could be unhappy at his 1 to 5 year net leasing client opting for a longer term with a bank.

Now if this is the issue and all our guy did was state that he was not going to waste his time bidding against cheaper bank financing, he would have been perfectly within his rights to do so.

But the rumor reported to us was just a broad undefined threat.

Here’s some shared “morality”:

• Assuming that there was no legitimate reason for someone warning someone not to work with someone else, making the kind of threat that was alleged makes the person making the threat seem desperate.
• Despite the fact that it handles billions of dollars in equipment each year, the rail leasing market is still a very small community. Everyone pretty much knows everyone else’s business. And everyone talks to everyone and eventually it will get back to the person who is the target of the threat.
• Sooner or later the threat will come back to “bite” the person making it. (It always does......)

So keep it clean guys!