Financial Services in the Capital Goods Sector: Analyzing Financing Solutions for Equipment Acquisition

Abstract

This paper contributes to a better understanding of financing solutions for equipment acquisition in the capital goods sector, which entails the subsectors of construction and material handling, over the equipment life cycle. We examine the users of the equipment, financing intermediaries, and creators of the equipment, and take a closer look at the drivers, benefits, risks, financiers' due diligence, and terms and conditions of the principal financing solutions and evaluate their significance. We demonstrate that the equipment’s characteristics and the vendor have a substantial impact on the selected solution and showcase a trend in the capital goods market away from physical towards digital and use modality 'as a Service' business models. Our research findings result from content analysis of annual reports, financial statements, press releases, and scientific publications of selected European corporations and lenders. They should enhance the awareness of corporations in the capital goods sector seeking the best financing approach for their equipment.