Today’s capital markets require securities offerings underwriting tools for B-Ds and RIAs that are best in class.
Off-The-Shelf Not Cutting It? Still Left With Having to Reject Opportunities?
It’s time to go beyond mitigation and into the realm of alternative transaction scenario constructs that can potentially save inherently weak candidates for securities offerings.Many programs and systems can provide support for conducting the capacity, collateral and credit risk assessment due diligence (to one degree or another). Everything looks good until you get to default risk assessment due diligence. Default risk kills securities offerings, CRE acquisition opportunities, profit margins and you still are left with ongoing investment fraud claims risk exposure. CRE underwriting (especially new construction) in particular requires securities underwriting tools that most firms just can’t afford because of the infrastructure support of personnel, systems, program policies and compliance requirements that come with Alternative Investments like commercial real estate. The end-result is, more often than not, that promising transaction in a high-demand market just can’t get approved. The firm loses the opportunity, money, time and resources for a big nothing. You have to change that dynamic, but how?
Default Risk Underwriting
When it comes to default risk you have to go all-in on resolving the core issues or walk away. Default risk prevention requires a systemic, end-to-end approach that supports the project through the securities offering underwriting and due diligence review process, and then supports the resulting investment for the entire holding period. iCREDIT provides that…
The Verifier Report is based upon the comprehensive INVIZEN underwriting platform and merely reports the high-level results of multiple due diligence assessments by our program. The Verifier Report focuses on the value of the deal proposed by the sponsor versus how the capital markets would price that deal. The value is based upon the probability of default and the potential investment loss severity risk exposure of net loss potential not otherwise funded for in a loss reserve (Basel III guidelines). Verifier receives critical data on the sale price of an acquisition, the cost of the securities float, market demand potential and the requirement of standing up all three alternative exit scenarios. That makes Verifier best in class. The story doesn’t end with funding, though. We continue to support the transaction post-funding with default prevention, fraud elimination, financial reporting, funds custody and market risk mitigation that is proactive in nature. That’s called iCREDIT and it’s also a best-in-class solution.
Manage the Contracts, the Vendors, the Money & the Execution
The underwriting review takes into account contracts, vendors, fiscal management and execution risk but provides nothing but remediation after the money changes hands. Compliance with FINRA and the other securities regulators requires more of us. We need a systemic approach that provides protection against vendor non-performance, change order disputes, mechanic’s lien fraud, embezzlement, false billing fraud, management execution risks, reporting risks, compliance and financial reporting transparency. That’s what iCREDIT provides…
The INVIZEN Model Overview
Our systemic approach is based upon the incorporation of the holistic end-to-end solution approach that combines next-gen analytics together with systemic control systems that provide the market-centric solution set framework of the INVIZEN Model. This building block approach focuses on the market data pertaining to the asset class in question itself, the value the capital markets place on the asset class in general, the specific risk elements of the specific transaction construct (i.e.: known colloquially as “story book deals”) that legacy systems are just not equipped to support (hence the saying, “we don’t do story book deals”), to determine the potential for key risks to actually have the ability to materialize and become materially significant in the course of the investment holding period. The system design provides an intentional departure from some business practices so that many of the subjective financial investment risks that conventional wisdom tells us are “baked into the deal”, can actually be eliminated from having a potential impact altogether. This has a potential profound impact on the entirety of the risk profile of a given asset vertical in general, and the subject risk analysis in particular. From a practical viewpoint, this means subjective financial investment risks such as bankruptcy risk, foreclosure risk, liquidity maintenance risk, fraud, and even systemic market risk (to name a few) can be reduced to a level of not being reasonably expected to have a material impact on the transaction, or being eliminated altogether. The INVIZEN Model’s integration approach takes these tenets and incorporates them in to the resulting business model, the reporting program and management of all funds as the basis for structuring a given transaction opportunity.
The fact is you have a new opportunity to obtain the support you require without adding a staffing resource burden, excessive training time or risking compliance audit failures. In fact, you can have the support you need seamlessly working in the background while you maximize opportunities other firms can’t begin to understand. That’s what iCREDIT provides and you can start today with a simple phone call.