Liquidation Process - Asset

Asset Liquidation

When your company is liquidating assets, you want to realize maximum value. The three main reasons businesses consider liquidating assets are 1) the assets are no longer needed (surplus assets), 2) the business needs additional working capital, or 3) to satisfy creditors.

Rabin’s Asset Liquidation Services

Rabin has extensive experience with liquidating commercial and industrial assets, including: real estate, machinery and equipment. Rabin provides comprehensive, experienced auction liquidation services to assist you through the process. We work meticulously to ensure you obtain maximum value. With over 60 years in the business, we have the expertise to handle any size of auction.

With our large database of potential buyers, we can directly reach out to our closest industry contacts and personally invite them to participate. Our proprietary auction platform and online technologies connect you with qualified buyers from all over the world.

Rabin Offers:

• Decades of experience with a proven track record of successful transactions
• Aggressive advertising campaigns with a dedicated sales team
• Excellent customer service and hands-on attention
• Methods tailored to meet our clients’ specific requirements
• A targeted worldwide audience, using a blend of traditional and digital media

The Asset Liquidation Process – A Step by Step Guide

Before liquidating assets it may be helpful to consult your lawyer and accountant or other tax professional for assistance in planning the liquidation. If you are liquidating assets to satisfy creditors, you may need to obtain their consent to do so.

Step One: Inventory the Business Assets to Liquidate

Inventory the assets your business owns and wishes to liquidate. Your list should include a detailed description of each item, photograph, purchase information, condition, warranty certificates and repair records, if applicable. If some items need painting, repair, or general cleaning, take care of them to maximize sale prices.

As you liquidate these assets, you’ll also want a record of the marketing process, purchaser, and the amount received. Keeping good records of the sale of your property will protect you in case you file for bankruptcy or a creditor questions your asset liquidation process. You may also need this information for your tax returns.

Step Two: Identity and Consider Your Options to Realize the Best Value for Your Assets

There are multiple options you should consider in order to get the liquidity you need from your assets. You may consider conducting an auction for your assets, or you may decide to liquidate the assets. (To understand the difference between the two methods, see “Liquidation Sale vs. Auction Sale: What’s The Difference?“. Whatever you decide may depend on the specific situation of your assets, their condition, variety, quantity, the time you have to dispose of them, macro market conditions, and more.

Step Three: Establish the Liquidation Value of Your Asset

Liquidation value is the anticipated price, that an asset is likely to bring under certain conditions including:

• Consummation of a sale within a severely limited marketing period
• Large quantity of items, which prevents achieving retail value for individual assets
• Current actual market conditions for the property of interest
• Buyers acting prudently and knowledgeably
• Motivated seller, who is under extreme compulsion to sell
• Limited marketing effort made
• Limited time allowed for the completion of the sale

Generally, due the existence of the above mentioned conditions, the liquidation value is considerably less than the Fair Market Value (retail value) in which both parties are typically motivated and neither is under compulsion to act. To establish the liquidation value of your assets, work with a qualified appraiser. Obtain a written liquidation value appraisal before you consider any purchase offers.

Step Four: Plan, Plan and…Plan

After you identified your options, and established the liquidation value for your assets, you should have a proactive strategy for recovering your asset value. Assemble the right team in your organization of everyone who needs to be involved (legal and office management staff, and even C-level executives). Evaluate the costs involved in your asset disposition plan as well as the potential costs (legal and otherwise) of not doing it. Create an aggressive, yet realistic timeline for completion, and methodically begin the process. Lastly, consider getting help from a third-party asset recovery and disposition expert with the expertise you need to address your asset disposition needs. It not only minimizes the organizational disruption, it also outsources the process to a qualified third party who has been involved in the exact process many times in the past.

Step Five: Execute a Clearly Defined Strategy for Disposing Your Business Assets

• Be proactive, and use your industry contacts, including equipment dealers, competitors and strategic suppliers, to find buyers.
• You may more easily find buyers for your machinery and equipment by listing your assets with a liquidity specialist like Rabin.
• If you have assets that will be hard to sell, such as very old, worn out or damaged equipment, consider selling them for their scrap value or donating them to charity (if possible) for a tax deduction.