The principal risks with most transactions are:

• over-engineering the systems solution for asset selection and analysis; and

• under-specifying the work required to run the transaction leaving key financial control issues and reports until after the transaction has closed (when the requirements creep up on the originator who is left to sort out the mess).

Dealing with these is generally a case of ensuring that the relevant areas within the originator are suitably informed as to what is needed of them - and that all requirements and actions are documented in full and in detail.

To decide whether or not securitisation is appropriate, there are four key determinations which need to be made:

1. what are the corporate objectives � funding costs (or is it ... "funds at any cost"), capital, accounting, tax etc..?

2. is the originator and its assets of a sufficient and consistent quality? This involves undertaking the sort of review and briefing process which is set out in the preceding section:

   1. a systematic review of the financial state of the originator, particularly its funding covenants (and whether the consent of any third parties is required) and its solvency for a two year period following the intended close of the transaction

   2. a legal analysis of the documentation supporting the receivables

   3. a review of underwriting and administration procedures

   4. consideration of the tax position of the originating group

   5. a systems review, including a detailed analysis of the data structures and transaction recording processes to determine the costs and time frames for the amendments which would be required for securitisation

   6. agreeing internal responsibilities, selecting and educating a working party team (representatives from every area in an organisation)

   7. obtaining commitments to the transaction internally

3. is there sufficient time, available resources and commitment to complete the transaction?

4. are the assets suitable? This involves a consideration of the risk characteristics of the receivables proposed to be used and the possible transaction size. Not all portfolios of receivables are sensible to securitise � for instance, risk concentrations of any kind should be avoided, and certain receivables carry additional risks with them, relating to liquidity, interest rate, foreign exchange etc...

All of the above questions can be answered relatively cheaply, and without the formal appointment of investment banking advisers and lawyers.

Once a company has determined that it is possible and desirable to complete a securitisation, and has assessed its own capabilities in relation to work required of a securitisation transaction, then the public aspects of the transaction can begin:

1. formal selection of assets to securitise;

2. agreement on a structure;

3. agreement on a realistic timetable;

4. documenting the structural approach (production of a preliminary document and systems specifications setting out how the transaction should work from everyone's perspective);>

5. selecting counterparties and underwriters;

6. contacting the rating agencies; and

7. formally appointing lawyers.

Securitisation is time-consuming, complicated and can be expensive. Avoiding some of the costs, ensuring that time tables are adhered to and getting a transaction which meets the originator's needs is a question of organisation and preparation.

The variety of issues, and the amounts of work involved mean that it is inevitable that a large number of advisers are needed to complete any transaction. Although there are both high internal and external costs associated with any transaction on this scale � securitisation does offer access to large amounts of funding, and once programmes are set up, they can be repeated relatively cheaply and easily.

Select your advisers carefully - and ensure that the advice which is received covers all aspects of the transaction, and includes systems, accounting, legal, tax, banking, rating and general administration.