Everybody Wants to Rule ABL

"Everybody Wants to Rule the World" by the band Tears for Fears is a 1985 pop anthem about the human desire for power, control and influence. Originally inspired by Cold War tensions and the desire for personal autonomy, it reflects on the fleeting nature of life and the chaotic nature of power struggles. But if you swap out the Cold War anxiety for the current state of the commercial finance industry, the lyrics land with uncomfortable precision. Because right now, across the entire ABL landscape – investors, banks, non-banks, FINCOs, private credit players – everyone, and I mean everyone, wants to rule ABL. And here is the thing about this: it is both completely rational and historically unprecedented. The lines between private credit versus FINCO versus bank are all merging, and new entrants such as liquidators are all now converging on these lines. Here’s the thing though, the cost of entry has never been easier, but the costs and barriers to success have never been higher.

The cost of entry is easy. A good team can soft market to a handful of sponsors and intermediaries to build a pipeline with just a cell phone and email once they get a capital commitment. Doing this now is much easier than 10 years ago and literally one million times easier than 20 years ago. Everything used to take so much longer – the capital, the warehouse line, the people, etc. versus now the market is too fluid. Today recruiting a team is similar to how football coaching staffs come together over a weekend. The challenge here is the cost to succeed, which is a higher bar than 10 years ago given the market today. To rule the world costs more than it used to and is a true barrier to success. The talent costs more, the deal sizes are bigger and it’s not worth doing unless there is some type of differentiation. In the past a group could succeed without a point of difference, but not today. 

Today’s ABL is a competition that anyone can enter, but few have an actual chance of succeeding without “real” capital, strong talent and differentiation. Every constituency now has an angle to rule ABL – banks partnering with private credit to form partnerships, BDCs buying ABLs, liquidators using their platforms as a way to take share and the list goes on. One of the driving forces here does extend beyond capital though. We are most likely experiencing both a cyclical and generational shift with the generational shift playing out in real-time. For years, the next generation waited. They paid dues. They learned collateral frameworks, built referral networks and sat through the credit committees. They were told their time would come, but not all want to inherit versus create something in a different mold.

The lyric "It's my own desire / It's my own remorse," captures something real about what is happening to the talent layer in ABL right now. The people leaving or making moves are not doing so because they are being pushed out. They are leaving because they finally asked themselves the question every ambitious lender eventually asks: Why am I building someone else's book? The answer, increasingly, is that they are not. They are going out and building their own book. New FINCOs are not appearing because institutional capital suddenly discovered ABL. They are appearing because experienced operators – people who know the collateral, know the borrowers, know the referral sources – have decided that the time is now.

Private credit managers have certainly been leaning into asset-based strategies, and some have done so with real commitment and genuine expertise. But ABL is a craft business. It rewards people who have spent years understanding collateral at the liquidation level, not just at the yield level. The platforms that will matter most in the next cycle are likely to be those built by operators first, capital raisers second – not the other way around. What remains to be seen is whether the private credit firms that drove the last cycle of capital will be the ones who drive the next cycle of talent migration. 

"All for freedom and for pleasure / Nothing ever lasts forever." That is the part of the song nobody wants to quote at industry conferences. But it is the truest line in the song. The institutional platforms that dominated ABL for the last thirty years did not get there by accident. They got there through talent, relationships and time. But nothing ever lasts forever – not market share, not loyalty, and certainly not the assumption that the best people will stay put simply because they have always done so. Here is what is different about this moment compared to previous cycles. In prior generations, leaving a bank to start something new was considered a career risk. You needed a franchise. You needed a brand. You needed someone else's credibility to open a door. That is no longer true, and the market knows it.

The new generation of ABL leaders has something the prior generation did not: proof of concept at scale, institutional LP interest in the asset class, and a deal advisory infrastructure that routes transactions to capability rather than to brand recognition. If you can underwrite faster, structure smarter, and actually pick up the phone when a borrower calls at 4 PM on a Friday, you can win deals. The big bank name on the letterhead matters less than it used to. To be clear, legacy platforms aren’t irrelevant – far from it. However, what’s different now is that moat for any platform is narrower than ever before. The investor demand follows talent, and it’s never been easier to start something. Again, the challenge is that while the cost of entry has never been lower, the cost of success has now never been higher.

"Everybody wants to rule the world." Yes. And now, for the first time in a long time, enough of them actually can, including the leaders still ruling it. The irony of everyone wanting to rule ABL is that ruling it – actually doing it well, over time, through a full credit cycle – requires exactly the kind of focus and restraint that most aspirants abandon the moment they have capital to deploy. The white space in ABL has never been about having cheaper money. It has been about having a defined product, time-tested temperament and judgment, and the discipline to use it.

"Say that you'll never, never, never, never need it / One headline, why believe it?" The headlines right now say ABL is booming. New entrants. Institutional capital flooding the space. All true. But the full song always tells a more complicated story than the chorus. The generational shift is real. The new leaders are real. The aspiring ones are real. What remains to be seen is who, when the music finally stops, is left standing – and who was just dancing.

Welcome to your life. There's no turning back.

This article was first published on ABL Advisor: https://www.abladvisor.com/articles/42959/everybody-wants-to-rule-abl