After a year of discussions, a small-ticket equipment leasing company and a vehicle leasing company in Baltimore have merged their operations.
Harbor Equipment Leasing and Fox-Valley Leasing have formed Madison Capital LLC to combine their overlapping customer bases in the Middle Atlantic states. "It's one-stop shopping," said Allan Levine, former president of Fox-Valley Leasing and executive vice president of Madison Capital.
The deal is an example of consolidation in the leasing industry, which has traditionally been highly fragmented.
With more entrepreneurs interested in leasing computers and other equipment, there's been more demand for leasing services. Also, leasing is especially popular with start-up small businesses that lack the capital and credit history to qualify for equipment loans.
To capture some of that business, banks are buying leasing companies or starting their own. And leasing companies are starting to merge in order to bulk up.
The portion of small businesses leasing equipment increased from 19% in 1990 to 25% in 1996, according to a 1996 survey by Payment Systems Inc.
Madison Capital president Mark Caplan said the merger will allow the companies to compete better for small-business customers. "Both sides wanted more product diversity and back-office support," Mr. Caplan said. "We will use the strong reputations both companies have to expand our customers' base."
Mr. Caplan said one-quarter of his company's customers used equipment leases from Harbor and vehicle leases from Fox-Valley, but he said almost all could use both services.
"Everybody needs equipment to make their product and delivery vans to transport them," said Mr. Caplan, who was president of Harbor Equipment Leasing.
The Equipment Leasing Association, an Arlington, Va., trade group, estimated that $176 billion of equipment will be leased this year. That's 30.9% of the $570 billion that businesses nationwide will spend on equipment, the group said.
Madison Capital expects to originate more than $15 million of leases this year. The company's average equipment lease is for $20,000, with varying terms depending on the life of the equipment.
Mr. Caplan projected that combined originations will increase to $25 million as the company adds customers in the next year.
Fox-Valley, which had been in business 20 years, was owned by two automobile dealers. Fifteen-year-old Harbor specialized in model home furnishings, education, and health care. u
