More than 80 teams of business students made hypothetical business proposals to loan officers recently at the College of Business and Economics’ Bankers’ Day. The 15-year-old, annual event, part of the CBE’s Intro to Business course, connects freshmen and sophomores with executives in finance and investment banking.
The course, used as a model in other business schools, requires students to develop and present plans for start-ups in the athletics industry. Each team must negotiate 60 percent of its financing with a professional banker.
“I’ve been doing this more than a decade, and every year Lehigh’s students amaze me,” says Kevin Clayton ‘84, principal of Oaktree Capital Management, L.P., who serves on Lehigh’s Board of Trustees and CBE’s Board of Advisors.
“These18- and 19-year-old kids, less than a year out of high school, can confidently present a complete breakdown of a business plan. They truly understand the basic fundamentals of launching a business.”
As students present proposals, bankers question everything from outsourcing proposals to manufacturing costs.
A good grasp of the fundamentals
The four freshmen of “Green Cleaning Corp.”— Eric Rosenbaum, Sean Joy, Kathleen Larkin and Katherine Kovach—pitched Spray Quattro, a deodorant and disinfectant to spray on clothing after rigorous activity when showering isn’t possible.
“They did a very good job of selling their product,” says Clayton. “They had a strong sense of their market, grasped the financials, and clicked well as a team.”
After negotiating, Clayton offered $58,000 in start-up loans at varying intervals over one, five and ten years. The group was granted a short-term interest rate of 4 percent, with 5 and 6 percent for intermediate and long-term loans—numbers close to what they had sought. They were surprised when Clayton asked for collateral.
“ProteX,” consisting of sophomore Roger Gesswein and freshmen Semir Redzepagic, Margie Guan and Danielle Albergo, fared well before Donald Gruhn ‘49, former member of the New York Stock Exchange and long-time supporter of the course. The group pitched a skin-care package to protect weightlifters from calluses and blisters.
Like Green Cleaning Corp., ProteX agreed to a 4-percent short-term loan.
“The group drove a good bargain,” says Gruhn, who has endowed a CBE speaker series and sits on the college’s Board of Advisors. “I liked their product and respected their negotiating skills. I offered a favorable 4-percent interest rate—a bit more than a half-point over prime, but above the very low rate of 3.5 percent they requested.
“Their presentation showed good product research and a thorough knowledge of the financials, as well as hard-nosed gumption in pursuing the best possible loan rate from the bank.”
Intro to Business was developed by Karen Collins, associate professor of accounting and author of Exploring Business.
“Bankers’ Day lets students interact with business leaders—look them in the eye, pitch an idea, and bargain for financial support—right off the bat,” says Collins.
“Bankers’ Day is one of the best days of the year,” says Clayton. “It is very fulfilling and rewarding to interact with such bright, mature and innovative students.”
Story by Tom Yencho
Posted on Wednesday, November 24, 2010