An asset can be considered almost anything, but it’s usually something of value such as a property. When you are downsizing or file bankruptcy, assets must be sold off (liquidated). There are two types: liquid or non-liquid. They’re based on their liquidity which signifies the conversion of fixed assets into liquidated assets. A business will also liquidate when closing their business or when selling overstock or surplus to salvage a margin of returns. There are many ways to do asset liquidation including whole lot purchases and auctions.
Whole Lot Purchase
Having a surplus of inventory or other goods can be costly, especially for manufacturers and large retailers because the product can depreciate over time. Surplus also takes up valuable space. In the event of a downsize or closing, businesses sell their fixed assets such as machinery, equipment and property. It’s the best option to quickly regain capital by selling off their most valuable assets and inventory in bulk to a select buyer or buyers after negotiation. This process is called whole lot purchase.
Dealers do not appraise the assets and inventory item but they provide an appraisal of the entire stock by considering the cost of storage, advertising, packaging and ease of distribution. While calculating the time each will take to sell and that in some cases, it may not be sold at all. Also, negotiations can be time consuming but setting the right price that both you and the buyer agree on is crucial.
Auctions are a faster way of liquidating assets. The process involves contacting the auction house and allowing them to sell your assets to the highest bidder. An online auction would attract more bidders and likely increase returns.
Whole Lot Purchase vs. Auction
Both are great approaches for liquidating assets. However, whole lot purchases are best when you are selling specialized or unique assets but auctions are faster.
Liquidating assets is a skill. Which is why it is important to get a good business equipment liquidator who has an established base, can get fair market value for your assets, and minimize losses.
For more information on asset liquidation, call Michaels Global Trading today at (888) 471-5066 or contact us here.