The Seventy Ninth Experience | De-Risking

Summary

The video features a discussion on how the 79th Group minimizes risk in its operations, emphasizing a strategic approach that involves independent audits, legal advice, and a strong focus on client protection. Key players, including chairman Dave Webster and advisor Simon Donaghue, stress the importance of de-risking through robust financial structures, partnerships, and careful asset management. They explain their unique ability to secure high-value opportunities and protect client investments through liquidity, quick decision-making, and strategic exits. The conversation highlights the company’s expertise in risk management and its commitment to ensuring profitable outcomes.

Takeaways

• 😀 The business focuses on de-risking investments by minimizing exposure for clients and ensuring financial security.
• 😀 Trustees play a crucial role in protecting clients' interests by overseeing the fulfillment of business obligations and ensuring funds are repaid in case of default.
• 😀 Legal reviews and external audits, such as ISO standards, are integral to ensuring regulatory compliance and business integrity.
• 😀 The company emphasizes the importance of speed and liquidity, enabling them to act quickly on opportunities that others might miss.
• 😀 The leadership regularly seeks advice from seasoned professionals, including experts in tax, law, and business strategy, to ensure sound decision-making.
• 😀 Asset acquisition strategies focus on purchasing undervalued assets, with clear exit strategies (e.g., IPOs, secondary finance) in place to secure profitability.
• 😀 Cash flow is a key driver of scalability, allowing the business to take on multiple projects simultaneously and expand operations.
• 😀 The company avoids conventional lending, preferring to use their own cash or a mix of cash and client funds to secure deals quickly and effectively.
• 😀 The management team considers the worst-case scenario when evaluating investments, ensuring that even in difficult situations, the business can break even or minimize losses.
• 😀 The business's expertise and ability to manage risk effectively allow them to offer clients a 25% higher value for their investment compared to competitors.

Q & A

How does the company approach risk management?

The company minimizes risk through a combination of intuition, instinct, and extensive checks and balances. The leadership emphasizes the importance of avoiding risk and relies on advisors and independent third parties for validation of decisions.

What role does the security trustee play in the company's operations?

The security trustee acts as an independent party protecting the clients' interests. They ensure that the business fulfills its commitments and monitor audits to maintain transparency, ultimately safeguarding the clients' investments.

What regulatory frameworks does the company participate in to mitigate risks?

The company engages in various regulatory frameworks, including external audits through ISO standards. These audits are conducted unannounced to ensure compliance and prevent any potential lapses in operations.

How does the company protect its clients' investments?

Investments are protected through a combination of strategic decisions, including leveraging external audits, legal reviews, and partnerships with trusted entities such as security trustees. The company also ensures it has multiple exit routes and secondary finance options for flexibility.

How does the company determine the risk associated with a particular deal?

The company focuses on a 'worst-case scenario' approach when evaluating deals. For example, they assess whether they can break even or exit with minimal loss. This pragmatic approach minimizes exposure to unforeseen risks.

Why is speed important in the company's business strategy?

Speed allows the company to act quickly on opportunities, often using their own capital or a combination of client funds. This enables them to secure deals before others who may require third-party financing or lengthy approval processes.

What is the company's approach to scaling its operations?

The company focuses on scaling by leveraging cash flow. More available capital means the ability to pursue more opportunities. They prioritize working on multiple projects simultaneously to achieve greater growth and maximize returns.

How does the company ensure it is always prepared to handle new opportunities?

The company maintains liquidity through its fixed income bonds, allowing them to purchase assets at competitive prices. By having cash readily available, they are positioned to quickly capitalize on favorable opportunities.

What sets the company apart from others in terms of investment strategy?

The company's strategy is unique in that it relies on securing assets at significantly below market value (e.g., acquiring sites at 20% of their value) and ensures that every deal has a clear exit strategy. This focus on risk management and flexibility is key to their success.

How does the company ensure profitability despite market fluctuations?

The company mitigates potential losses by purchasing assets with substantial upside potential and ensuring there are contingency plans in place. They conduct detailed risk assessments and structure deals to be resilient in various market conditions.