Padel, exits and the importance of thinking ahead – Cawood

We weren’t talking about products or pricing, we were talking about padel, of all things, and how you quickly realise it’s no good just chasing the ball that’s in front of you. The players who make it look easy are already thinking about the next shot before they’ve finished the current one.

I came away thinking our industry could probably do with a bit more of that mindset. We spend a lot of time talking about getting deals over the line, yet not nearly enough time talking about what happens afterwards. That’s a shame because, in today’s market, getting the deal funded is only half the battle.

Over the past few weeks, I’ve been out meeting brokers across the country and, despite covering different regions and different businesses, the conversations have all drifted in a similar direction. We might start by talking about purchase activity, refurbishment or development finance, but sooner or later, we end up talking about exits. I think that’s very telling about the kind of market we are currently in.

The feedback has been remarkably consistent. Purchase activity remains subdued, and affordability is still making life difficult for plenty of buyers. Add continued uncertainty for landlords into the mix and it doesn’t take much for an exit strategy that looked perfectly sensible on day one to become much harder six or 12 months later.

That’s why I’ve found myself asking a different question. Instead of asking whether we can complete the deal, perhaps we should be asking whether we’ve given the borrower the best possible chance of completing the journey. They’re two very different things, and I think we’ve become a little too focused on the first.

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Maybe that’s because completion is the easy bit to cheer about. We publish the case study, announce another successful transaction and move on to the next one. Yet very few people ever talk about what happened 18 months later. Did the borrower refinance when they expected to? Did they sell the property on time? Did the original plan actually work?

It’s also why some of what I’m seeing in the market makes me slightly uneasy. Competition is fierce and new lenders continue to appear, all looking for a way to stand apart. Once products start looking similar, the temptation is to stretch criteria, lend a little more or move a little further up the risk curve because that’s one of the few ways left to look different.

We’ve all seen markets behave like that before and history has a habit of reminding us how those stories can end. I’m not suggesting we’re heading back there, although I do think it’s worth asking one simple question before any deal completes: what happens if things don’t go exactly to plan?

The importance of flexibility

That’s where flexibility comes into its own. A single exit strategy might look perfectly workable today, although markets rarely stand still for 18 months. Looking at more than one realistic route isn’t a sign that anyone lacks faith, it’s simply recognising that circumstances change and borrowers deserve solutions that can change with them.

I think brokers have an important role to play here as well. The best ones don’t see completion as the end of their involvement. They’re already thinking about the refinance, the sale or whatever comes next, keeping in touch with clients and adapting plans where necessary. That doesn’t just produce better outcomes, it builds stronger relationships because borrowers remember the people who stayed with them when circumstances changed.

Perhaps it’s time we changed what we celebrate as an industry. Completing a bridge will always be important and getting funds out quickly will never stop being a priority. At the same time, if we really want to judge whether we’ve done a good job, maybe we should spend less time counting completions and more time talking about successful exits.