Key Equipment Finance executive Amy Paine was among three asset managers who recently shared with Monitor Daily how they provide accurate valuations in a dynamic environment with equipment markets always in a state of flux.“Most of our evaluation practices will carry over into 2018,” said Paine, senior vice president, asset management, Key Equipment Finance, in the article. “However, we need to understand the new tax law and accounting rules to see how they might affect certain asset classes or financial structures. There will be 100% expensing, for example, and we don’t yet know how that will play out. We may have to change some of our risk assessments accordingly.”
A significant portion of Key Equipment Finance's volume has always been in information technology, and 2017 was no exception, Paine went on to say.
“There was significant demand for networking equipment, cyber-security solutions, laptops, tablets and more," she said. "We expect growth in managed service contract financing as more companies outsource their IT operations to service providers who will, in turn, need to expand their operations. The amount of servers that a company like Amazon Web Services buys is astounding. Also, as the Internet of Things continues to grow, there will be increasing needs for IT solutions.”
Much of the strength of the economy can be attributed to a significant drop in the number of regulations implemented in 2017, Paine added.
“Through the end of the third quarter, 45,678 pages of regulations were added to the federal registry," Paine said. "That’s a drop from the 95,894 pages added in 2016. The cost of complying with regulations is large, so slowing the rate is a benefit to business. In the case of banking, the big banks can afford the cost of compliance, but smaller banks need to allocate a disproportionate amount of resources to be compliant — putting them at a competitive disadvantage.”
All of the participants in the article saw both replacement demand and capacity expansion in 2017 and expect the trend to continue.
“In the IT space, many companies extended the refresh cycle on their hardware and software updates in order to pay for cyber-security programs,” Paine said. “Now they have reached the point where they need to replace the hardware but must also keep up with the cyber-security programs. In that case, there will be both replacement and expansion.”
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