by Tom Noonan, EquipNet, Inc

 
Thankfully gone from professional IR practices are surplus disposition events with last-minute scrambles that are more about emptying a plant than recovering profits. Under a tight deadline, if a sale couldn’t be quickly arranged with a local equipment dealer, companies were forced into having a single day auction event.  Although many auctions were successful, this strategy did not guarantee the highest level of investment recovery.  Factors such as time of year, weather conditions, and the location of the equipment heavily influenced results.
 
Recent technological advances have produced many new and effective liquidation strategies that offer pre-auction options. Depending on the timeline (still an all-too-frequent hurdle), Investment Recovery professionals now have a plethora of opportunities available to help get increased visibility and top dollar for surplus assets.
 
Here are my recommendations for using technology and IR best practices to improve your return:
 


Check Your Schedule.
When charged with selling idle equipment, your first question might be: “How much time do I have?”  With asset management, the early bird definitely gets the fattest, juiciest worm. The more advanced planning you can do, the more liquidation options you have, which in turn help determine the strategies to employ if you decide to go to auction.

 
Define Your Assets. Collecting detailed purchasing and maintenance history with good quality photographs can be a critical factor in providing the accurate information on which potential buyers can depend.
 


Assess the True Value of Your Assets.
Knowing how much your equipment is worth and who might want to purchase it is critical. If no one needs or wants a $500,000 piece of machinery, it may not be worth anything but the metal it’s made from. With values determined, you’ll be able to place your items into various potential disposition buckets, including internal redeployment, negotiated sales, immediate clearance, and scrap. This allows proper planning for the type of disposition events (including auctions) you may want to pursue as you move closer to your deadline.


PRE-AUCTION ACTIVITY

With a disposition strategy in place, you’re ready to take advantage of time, if you have it. Over time, if a piece of equipment can’t be deployed within your organization, you can move it to an online marketplace. If it still goes unsold, you can put it in an auction. If no one buys it, you can sell it for scrap.
 
Redeployment Systems—Redeploying equipment within your company avoids the cost of purchasing equipment you already own which may not be visible to others. Leading organizations use state-of-the-art software to post, track, identify, and internally redeploy equipment that isn’t being used in its present location. This allows IR professionals to manage workflow, search for particular equipment, communicate between various levels and locations, and notify others of available equipment.
 
Used-Equipment Resale Websites—Marketing equipment in a negotiated sales format through an online marketplace gives your assets a large amount of exposure and may yield the highest sales return. It’s important to make sure the listing is promoted to the correct group of end users who may be interested in purchasing your idle assets.
 


General merchandise websites such as eBay Stores
—If you want to sell assets in a timely manner and stay in control of the sale price, something worth mentioning is that eBay also gives you the choice to sell ‘Buy-It-Now’ items with the option to “Make an Offer”.  In turn, buyers have an opportunity to purchase pre-owned equipment at a pre-determined, non-negotiable fixed amount at a considerable cost savings over the price of new equipment


AUCTION STRATEGIES

Burgeoning technology has created a myriad of asset liquidation options, including pre-auction and non-traditional auction activities designed to maximize your returns and minimize loss.
 
Live and Webcast Auctions—At this “technology meets tradition” event, equipment is auctioned off to an in-person audience with online bidders participating remotely via a simultaneous webcast. Live and webcast auctions are often the right option for sellers with significant quantities of equipment or for companies that are downsizing and need to liquidate assets in a timely manner. If the seller’s facility does not allow for a live, on-site auction, all bidding can be conducted via webcast.
 
Sealed Bid Auctions—With this type of auction, your pre-owned equipment is offered in a closed or sealed bid environment. Potential buyers submit closed bids that are not visible to other bidders. At the end of the auction, the sealed bids are opened and the highest bidder wins. The sealed bid auction is often the right option for hard-to-move equipment without a lot of potential buyers.
 
Online Auctions—eBay and other online auctions are often the best venue for items that would appeal to a broad customer base and benefit from a competitive bid process. This channel can be used at any stage of the asset recovery cycle.
 

SELECT A STRATEGY AND CREATE A PLAN
Carrying surplus assets is like leaving money in a piggy bank. It’s nice to know it’s there, but it’s more useful in your wallet.  As Investment Recovery professionals, you have a wealth of knowledge about the ins and outs of your company and your industry. With the right liquidation strategy, there are no limits to your ability to use your idle assets to maximize profits and minimize losses, making a notable impact on your company’s bottom line.
 
Asset management specialists can offer recommendations to help you determine which disposition strategy will work best for your particular situation. It’s important to consider a variety of factors, including: timeline, the type and value of the assets you want to sell, and the demand for that particular equipment within your customer base. New technology brings flexibility to the process of managing surplus assets, and as deadlines approach, your liquidation strategies can change as well.

 

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 4, 2008
© The Investment Recovery Association