When auctions or liquidations are required, most
clients’ objectives are to achieve the highest return and an outcome that
comes within the proposed estimated returns (+/- 10% is a reasonable
Factors Impacting Auction or Liquidation
Each auction or liquidation can be significantly distinct from one another
despite assets possessing close similarity. Some of the factors causing
variation are location, time of year, condition of the assets, current
marketplace, hazardous waste issues, landlord cooperation and the amount
of time to conduct the sale.
Type of Property to
Specialized equipment can have large swings in value based on limited
customers in the marketplace, as well as, whether or not a buyer needs
it now or not. If a buyer needs it now, the sale can garner very good
returns. If not, the equipment will typically be sold for approximately
10% to 50% of its value. Other factors that can also affect value are
potential maintenance issues, re-calibration or de-contamination
requirements, software transferability, equipment that may need to
remain running and operational, or equipment that may need to be
properly shut down.
Location of Sale
The type of auction or liquidation can impact returns as well. A sale
being held “onsite” in conjunction with an online webcast can typically
achieve higher returns (approximately 10% to 20%, or higher in some
cases), compared to only conducting sales online, or off-site. This is
because assets show better in place or in use, providing buyers the
opportunity to properly inspect, touch and feel, thus removing buyer
speculation, which can often times causes conservative bidding.
Auction/liquidation returns can also be challenged if the assets need to
be relocated or consolidated from various locations, which often adds
additional expenses. This can also have a negative effect on
presentation, which can hinder achieving highest possible returns.
Terms of Sale
When it comes time to auction or liquidate, to help obtain the proposed
estimated returns, one should opt to receive a “Cash Buy Out” or
“Guarantee of Expected Returns.” These will help to eliminate any risk
in the sale process.
To help achieve both the highest and most accurate returns, it is best
to utilize a proven and seasoned auction company, with experienced
auctioneers and support staff who truly understand the various assets
for sale and who conduct sales on a regular basis. Also, they should
have a deep understanding of the global marketplace, along with an
expansive data base of companies, manufacturers, retailers,
distributors, wholesalers, end-users and dealers (not just purchased
Advantages of the
Auction / Liquidation Process
Using the auction or liquidation process to sell assets can have many
All attention is
focused on marketing the seller’s assets to thousands of potential
buyers (oftentimes globally).
The process creates a
deadline and sense of urgency, causing qualified buyers to compete
amongst one another, knowing that the seller is taking serious action to
Auctions can exceed the
price of a negotiated sale.
Auctions eliminate long
negotiations, numerous showings, potentially high maintenance and
carrying costs and various unforeseen risks.
Assets are typically
sold “as is” with no contingencies.
All assets are sold at
the same time, often to individual buyers, providing the seller the
benefits of a bulk sale.
Upon conclusion of the
Auction sale, the facility can be near or completely empty and broom
swept, if required. (Please note, based on the facilities condition and
potential environmental issues, this service can be very costly to
Kletecka is an Auction Consultant with AAG – American Auctioneers
Group, which has a 20 year history of conducting approximately 90 to 100
auctions annually with a 95% success rate in accurately determining