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PROFESSIONAL
ASSET RECOVERY
SPECIALIST

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What is Asset Recovery and How is it Achieved?

Asset Recovery is the conversion of the seller's business and/or personal property into cash. The following is a brief description of the three major liquidation methods commonly employed in converting a seller's assets into cash.

Liquidation by Private or Individual Sale. The seller or the seller's agent advertises and markets the assets in an effort to generate sales to private individuals and end users. This method may generate the greatest cash recovery, but it can also be costly and time consuming. In many cases, unless buyers are found quickly, the costs of advertising, storage, handling, and other expenses, will negate any increased revenues generated by the private sale. A seller with intentions of converting assets to cash by private sale must know the "appraised market value" of the assets before selling. A mistake that some sellers make is marketing their assets to dealers. Dealers are generally the easiest buyers to find, but remember, dealers make their money by "buying low and selling high."

Classic Liquidation Sale. This method involves the seller, or the seller's agent, conducting a liquidation sale to convert the assets into cash. A properly performed liquidation sale can result in a very nice cash recovery for the seller. Although liquidation sales may vary in design, they are all essentially the same. The sale starts with the assets being offered at a discounted price, and the discounts increase as the sale progresses with time. Liquidation sales performed by an agent can range from a few days to several weeks in duration. Events conducted by the seller, such as "going out of business" sales, can last much longer. Liquidation sales can be costly to advertise due to their duration, and labor costs can be substantial. The sale has to be conducted somewhere, so rent and utilities must be considered. Remember, an online liquidation does not negate the cost of storage and handling. Also, liquidation sales come with the important consideration of which party will be responsible for the disposition of the assets that do not sell. The grand finale of a well-performed liquidation sale may need to be an absolute auction of all the remaining assets. A professional asset recovery specialist will make sure that if it is likely a portion of the seller's assets will remain at the end of the sale, the unsold portion will be substantial enough to have "auction drawing power." This is achieved by controlling the discount rates during the liquidation; watching what is selling and what is not; and knowing at what point to stop the liquidation sale and conduct the absolute auction.

Liquidation by the Auction Method. In many cases, an auction is simply the best way for a seller to convert assets into cash. The auction method of liquidation affords the seller the simplest, fastest, and most efficient way to convert assets into cash. The auction method of liquidation is by far the most time and trial proven method known in the business world. The seller is afforded the luxury of choosing the time and place to convert the assets into cash. The assets are sold, the buyers are responsible for removals, and the premises can be vacated immediately upon the conclusion of the removal process. In other words, the auction is performed and the deal is done. It is the most cost efficient liquidation method in terms of advertising, labor, rent, utilities, and other expenses, to convert the seller's assets into cash. The auction method allows for a group of motivated buyers to gather in the same place at the same time. This in-turn creates the competitive bidding spirit that drives all auctions. A well-conducted auction can and should generate excellent cash recovery for the seller. In some cases, due to the competitive bidding spirit, recovery can exceed the fair market value of the assets. It is true that certain types of assets do not lend themselves well to the auction method of liquidation. For those, choose the private sale or orderly liquidation sale methods. If the assets are of a type and sufficient quantity to lend them well to the auction method, it is this author's opinion that a seller should consider no other means of liquidation.

What is a Professional Asset Recovery Specialist?

Before choosing an auction or liquidation company, a seller should be reasonably sure the company has the ability to bring in the right type and number of buyers that will be needed to maximize the cash recovery from the assets. What the seller is searching for is a professional asset recovery specialist. A good way to determine the ability of a company to perform is to ask for references. Checking with a company's former clients is always a good first step. If a company's former clients are satisfied with the cash recovery they received from their assets, chances are the seller can expect the same.

If a seller's assets consist mainly of a singular commodity, the seller may wish to commission a company that specializes in that commodity. However, be aware that when dealing with a highly specialized auction or liquidation company, you are also dealing with that company's cultivated group of buyers. Unfortunately, this can result in the buyers having too much control over the selling price of the assets, thus resulting in less cash recovery from the assets.

Whether the seller's assets are of a singular or diverse nature, the seller may wish to commission a company that has performed successfully in liquidating a wide variety of assets. This type of company is the true professional asset recovery specialist. Such a company's success is likely due in part to its network of professional associates. The company's ability to draw upon its network resources will allow it to learn about and accurately appraise the assets it has been commissioned to liquidate. This company's success also stems from its efficiency in determining who the buyers are, and how many are needed to maximize the cash recovery from the seller's assets. Once the company has utilized its network resources to learn about and appraise the seller's assets, and then identified the buyers, it is proficient in getting the buyers there on sale day. This type of company will have an excellent record of pleasing the seller with the dollar recovery generated from the assets it has been commissioned to liquidate.

Johnny Benson

Owner & Auctioneer

ALLIANCE Auctioneering & Equipment

ALLIANCE Auctioneering & Equipment • Columbia, SC • 888-468-8125 • Email: allianceae@aol.com