Due diligence Report – Art Lending
ASSIGNMENT: Art Secured Lending – Due diligence Report
You have been asked by a private bank to provide a due-diligence report on an individual art work which they are considering accepting as collateral for a 5 year-fixed bullet loan. Pick a fine art object of your choice (must have a market value above $100,000) and carry out the following due-diligence research:
1. Artist specific information
2. Object specific information
3. Artist Market Analysis
4. Value appraisal
5. Risk appraisal : Graphs from Arttactic to include
a. Market Risks : Graphs from Arttactic to include
b. Art work specific risks:
i. Quantitative: volatility and price-risk
ii. Qualitative: object risks, eco-system/ endorsement risks
6. Final recommendation
– Structure and clarity: Is the proposal clearly and professional presented? Is it logically structured? Are the key points convincingly argued?
– Rigour of research: What tools/methodology has been used to undertake the research? Are a range of relevant sources used to inform the discussion?
– Application of the theory: Is there evidence of understanding of underlying theory taught in the course? Are there references to appropriate academic research that can inform practical choices?
– Quantitative and Qualitative valuation and risk factors: Does the student demonstrate knowledge and skills in applying both quantitative and qualitative tools to the analysis.
– Credibility: Would the bank be willing to lend against the object based on this proposal?
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