Since the business world can be so competitive, not all companies will end up being successful. In fact, each year, about 7000 companies declare bankruptcy in Canada. With failed ventures, you can lose valuable things like employees and funds. Even though it can be hard to see your efforts go wrong, you can still recover your assets.
If your company is in financial distress and cannot pay debts or bills, not all hope is lost—there are alternatives available for you. Many businesses pursue one avenue by selling a non-essential business asset to use as working capital that can be traded. This method of selling an asset for cash is referred to as business asset liquidation. If this is the option that feels right to you, here is everything you need to know about this process.
What is asset liquidation?
Simply put, asset liquidation is selling an organization’s assets to resolve issues with their operations. Many businesses opt for this process due to acquisitions, unforeseen circumstances, and forced exits. When a company cannot stay afloat, liquidation is an effective method for paying back debts to creditors.
What kind of assets can a company liquidate?
A business has various assets that they can liquidate. Some of the most common include the following:
- Valuable office equipment
- Unused inventory
What are the types of liquidation?
The two most common types of liquidation include voluntary and compulsory. Voluntary liquidation is when an insolvent company cannot pay off debts to creditors and needs to shut down operations. During this process, a Toronto liquidator designated by a creditor will start the IT and asset liquidation. Compulsory liquidation involves a business being forced to shut down operations because the creditors request it. This process is involuntary and not desired by the company’s directors.
What’s the asset liquidation process?
To get started with a liquidation, there are four essential steps:
- Determine what you want to sell
- Write descriptions and create assign values
- Find out who your buyer is
- Discover how you want to sell your assets
Now that you have an idea of the four significant steps for the asset liquidation process, we can get into those ideas in more detail.
Figuring Out What You Want to Sell
Every industry is different, so deciding what you want to sell can be challenging. There are three typical types of assets worth taking into account:
- Analyze your current inventory. Depending on your company, your inventory will vary, but you should investigate what you have on hand.
- Determine assets that have been in production either in your inventory or other items. For instance, if you own machinery or larger equipment for production, these could be valuable items to liquidate.
- You can discover goods or services that are the most valuable to your company, but that you didn’t use during final production. In most cases, it will likely be your business’s furniture. Since they don’t provide any potential profits like other assets, they can be an excellent liquidation option.
Once you have gone through all your potential assets, make a list of liquidation items. You can organize the list any way you see fit, and that will give you a better idea about what would be best to sell.
Determine Descriptions and Assign Values
Now that you’ve determined your liquidation items, get into further detail and approximate a dollar amount for each item. The more descriptive you are, the better, as your future buyer will have a better sense of the asset they are considering purchasing. To figure out these items’ costs, you can create a balance sheet, make your best estimate, or even hire a qualified appraiser if your budget allows.
Discover Your Buyer
Once you have your items and description sheet ready to go, now is the time to find the best buyer. Before you start liquidation, knowing who is interested in buying the items is essential. It all depends on what industry your company is in, and finding a purchaser in the same or a similar field. Be sure to find people in your area, and get in touch with them to see if they would like to purchase your assets.
Methods for Selling Your Assets
Determining how you want to sell your assets will help make the liquidation process as seamless as possible. First, it all depends on your industry. For instance, if you have a retail company, a blowout sale can be an excellent method. By dropping your prices, you’ll attract more people who want a good deal and will purchase a significant amount of your inventory.
You can get in touch with auction houses or asset management companies to purchase more oversized items. In this case, it’s a seamless process as these types of experts have years of experience with such sales and can ensure that they run according to plan. No matter what method you choose, be sure to contact qualified professionals, like the Michaels Global Trading team, so that the process will be successful. Plus, these types of companies have useful contacts to inform about your sale and who will pay a fair price for the items.
Let Us Help You Liquidate Your Assets
Be sure to consider a company like Michaels Global Trading who can work with you to meet your goals. We have years of experience helping clients manage their liquidation process and can get you top dollar for your assets. Don’t hesitate to contact us to find out more about asset liquidation. Give us a call today at 888-471-5066.