If you were to turn on the nearest TV right now, odds are pretty good that there’s a reality show on. They’re everywhere, and about every subject imaginable.  There are reality shows about cooking, fashion design, job searches, hoarders, storage unit auctions, regular auctions, flea markets, dating, celebrity rehab, and losing weight.  There are even reality shows about live sports, which itself IS a reality show (and arguably the first).  Someone even came up with the idea that there wasn’t enough sports coverage, or sports related TV, or sports related reality shows, so they started doing shows about athletes’ wives.  It would seem there’s an audience for anything, which is why there should probably be a reality show about everything.

So the question presented itself; why isn’t there a reality show about field examinations?  The answer also presented itself rather quickly; no one wants to watch someone analyze A/R.  Agreed.  As a firm, the process of identifying collateral value, developing a formula or method to lend against it, and supporting that method with data, is our livelihood, so it’s interesting enough for us.  We are in a position where we are welcomed to a new Company each week, and each week that Company could be drastically different from the week before.  The various industries, the processes used to analyze the various types of collateral, the interesting people we meet, the show could write itself.  Sure, it may sound dull to some, but watching a group of sorority sisters help their friend purchase her new dress sounds fairly dull to others, and that show is doing just fine.  As it turns out, there already is a show that could be considered a reality show about lending, and odds are you’ve already seen it.  It’s called Pawn Stars, and analyzes the lender/borrower relationship fairly well while showing glimpse into the importance of the field examination in that relationship.

It you haven’t seen the show (perfectly understandable), it’s basically about a pawn shop in Las Vegas run by three generations of the Harrison family, and follows them through their daily routine of lending money on, or outright buying, items brought in by people from all walks of life.  Items brought to the Harrison’s vary from engagement rings to Super Bowl rings, ten-speeds to Harleys, and Little Orphan Annie decoder rings to disassembled propeller planes.  The Harrisons are very good at identifying items, and applying a value to them, sometimes to the chagrin of their customers who believe their items to be more valuable than the store’s assessment.  But they are in business to make money, and must ensure that they don’t overspend on an item that could take up floor space and not sell, particularly for odd items that require a specific audience.

The Harrisons are quick to admit that they are not exactly experts on everything, so when disagreements (or simple uncertainty) arise, they bring in a 3rdparty expert to look at the items to be certain of the value, and in some cases, these experts may present a value higher than the Harrison’s may have initially suggested, a boon for the customer that makes for good TV.  On the basis of that expert’s analysis, the store eventually haggles for a final offer with the customer, take it or leave it.  Many customers balk at the first number presented to them, as the value the store places on the items is usually drastically discounted from the expert’s value (usually 50% of the appraised value for starters), because after all, the Harrison’s need to make money too.

Asset based lending, and the function of field examinations, are somewhat similar.  Companies with a loan are essentially the customers presenting items of value as collateral to the bank, who in this case, would play the part of the Harrisons.  Though banks certainly have ample experience in lending, as the Harrisons do, the bank still needs to do their due diligence to ensure the Company’s books and records, and pledged collateral “is what they say it is”.   That’s where the field examiners come in.

We are the “3rdparty experts” that the bank sends in to analyze collateral to ensure that what is being presented, would hold its value in the event that the Company is unable to satisfy their loan requirements.  At times we’re asked by companies, “Why do you need to do that test?” and the answer is simply, we need to ensure that the collateral pledged for the loan is good collateral.  Whether that’s through invoice testing to ensure goods have shipped by the time the invoice was generated, counting inventory and verifying the totals are accurate to the reports issued to the bank, or louping diamonds to ensure grades and qualities match the items listed, we need to analyze every aspect of the collateral. Just as the Harrisons’ experts use their own experience and objective opinion to determine whether something may be the real thing or a reproduction, we use our experience, and objective analysis to form an opinion on the quality of the collateral pledged to the bank.

It’s a simplified model of how lending works, but Pawn Stars may be the closest thing the banking industry will get to a reality show.  Borrowing and lending are the fundamentals of the show, as it’s the one thing guaranteed to appear in every episode, but it’s the people that make it watchable.  This is another parallel to field exams, where analysis is our common thread, and the people we meet, and industries we encounter are what makes what we do fascinating, and potentially good TV.  There are enough people that believe the world is going to end in 2012, so if the world’s going to end this year anyway, let’s give it a try!

For asset based or commercial field examinations, please feel free to contact us via the website.