Once a business owner arrives at the monumental decision to exit their enterprise, they will find themselves confronted with an entirely new set of questions to consider. Should they pass it on to the next generation? Should they sell it to the highest bidder? Should they merge with a competitor? Should they just call it quits?
In a post last month, our blog began discussing how those business owners looking to close the door entirely have the option of liquidating assets. Specifically, we discussed the need to consult with skilled professionals before proceeding and the first step of creating an inventory. We'll conclude these efforts in today's post.
Second step: Preparing inventory
After a proper inventory of business assets is created, experts indicate that the next step is to ensure they are ready for sale. While this means making sure assets are presentable, it also means making sure they are operational. In other words, assets need to be clean and ready for demonstration.
Another consideration to keep in mind, say experts, is that if the sale is to be held on the site of the soon-to-be former business, business owners should ensure the premises are cleanly and navigable, and that anything that might serve to turn away potential bidders is taken care of beforehand.
Third step: Establishing liquidation value
While it can be tempting for a business owner to assign values to assets that he or she thinks are appropriate, this can be a potentially costly exercise. Indeed, pricing an asset too high may result in it generating few -- if any -- bids while pricing an asset too low will mean fewer dollars for the business owner.
As such, experts advise business owners to consider retaining the services of a qualified appraiser who can provide written liquidation value appraisals to help guide the pricing process.
Fourth step: Selecting the type of auction and the date
While a business owner might think the only option for a liquidation sale is a public sale, this is far from the case. The reality is he or she can choose from one or any combination of the following:
- Consignment sales
- Sealed bid sales
- Online sales
- Negotiated sales
- Retail sales
- Public auctions
As for the date of the sale, experts indicate that it should be held at a time and date most appropriate for the merchandise, most likely to draw the intended bidders and most in line with any marketing plans.
Once again, what all of this serves to highlight is that any business owner considering the liquidation of assets should strongly consider speaking with a skilled legal professional and/or accountant able to protect their best interests prior to initiating this complex undertaking.