By CEO/President and Founder Mike Bontrager
Twenty years ago as of August 26, Chatham officially opened its doors. Or more accurately, its door. It was an office over my garage with a newly installed Telerate satellite dish outside that provided connection to the markets I left on Wall Street. I decided to call the company, “Chatham Financial,” not after the perhaps known towns of Chatham, NJ or Chatham, MA but after the nearby non-descript town with a single blinking, yellow light. “Bontrager & Associates” seemed like a dead giveaway that it was just me and my dog. This came in handy a few weeks into my new venture when I needed some help and called the swaps desk at Goldman and introduced myself from Chatham Financial. After a pause on the other line, the trader responded, “Yeah, I think we’ve dealt with you guys before.”
The idea behind Chatham was not to sell a service but to become part of our clients’ team helping them solve their risk problems. My early goal was not to be viewed as a vendor, but rather as a part of their finance team. Convincing companies to pay for an intangible service was tough, especially in 1991 when it wasn’t always so clear to the clients what the need was, let alone how I would be able to meet it. But better to be lucky than smart and my first big break was working with Kimco Realty when they went public in late 1991. Milton Cooper, Kimco’s Chairman, was exceedingly good to me and helped me with contacts in the real estate world as the industry increasingly turned to the public markets. As real estate opportunity funds began to form and the CMBS markets began to emerge, we were fortunate to play an early role, often helping to create standardization around the hedging products that were being used.
As the real estate markets took off so did Chatham. We built an office behind my house and added people. While we were working on large deals with some of the most significant players in the real estate market, we joked that we were “just a bunch of guys working over a garage”, which was literally true. We had many interesting twists in those early years such as the time when I looked out the window in horror to see my four-year-old daughter lead a client in her heels across our back yard because my daughter had met her at the car and asked, “Do you want to see my bunnies before you see my dad?” Or the time my neighbor’s cows got out and decided to surround the building and moo loudly while we were conducting a swap auction.
At the turn of the millennium, accounting for derivatives was a topic that received more and more press. Early on we realized that this was going to be a big problem for many of our clients and we dedicated substantial resources to get ready for FAS 133. We also began investing in technology to prepare for the day when hedges would need to be on the balance sheet. At the same time some of our opportunity fund clients began investing in Europe and after one client said to me, “Could you just get into our time zone?” we opened a London office.
Many of the businesses we entered, we did so by following our clients’ needs. A client asked for help with one of the first defeasances ever done and Chatham became a leader in defeasance. A real estate client wanted to do a swap but only a regional bank with no swap capability would provide credit so we created an outsourced hedge capability for regional banks. Our real estate opportunity fund clients referred us to the private equity side of the house and now PE is a major segment of our business. Our PE clients asked us to work with their portfolio companies and now we serve hundreds of corporates. As our fund clients began investing more in Asia, we opened our Singapore office to serve the region. When real estate clients began to ask about what we were seeing in loan agreements, we created a Capital Advisory team to raise debt and have advised on some of the largest transactions in the past several years. When politicians in Washington demonstrated that they didn’t understand how end users use derivatives, we responded with a regulatory team that reduced the negative implications of Dodd-Frank.
The same goes for our technology. We built our technology to handle the entire process flow of a transaction-from analysis to pricing to execution to accounting to valuation to reporting. When we realized that some of our clients did not have a good way of tracking their loans, we built our debt management system called FMS. Initially, we weren’t selling software but rather building it for us so that we could serve our clients. As a result, our technology became tremendously robust because it is continuously tested by power users who provide constant feedback and improvements. We are now making more and more of this web-based software directly available to clients.
We have long since moved out of the office behind my house, but our attitude has not changed. We feel so fortunate to have played the role we have over the past 20 years in the markets we serve. Early on we realized that trust is the critical component and we need to constantly demonstrate that we are worthy of the trust clients place in us. We feel so lucky to be working with great clients in an intellectually stimulating area where we are able to demonstrate real impact.
For those of you who are clients: Thank you for putting your trust in us. We will work diligently never to have you question that trust. To those of you who aren’t clients: Why aren’t you? We would love the opportunity to demonstrate why we have created thousands of thrilled clients.
Thanks for all your help in making our first 20 years great and we look forward to serving you over the next 20!