Liquidation Support Services
One of the services that Collateral Evaluation Associates, Inc. (CEA) provides is liquidation support services. CEA does not provide auction services and does not purchase equipment or inventory for subsequent resale. Instead, our liquidation support services are consulting based and tailored to the situation at hand. In most cases, CEA would have already provided an appraisal service and therefore have familiarity with the assets being sold and factors that would impact the liquidation process.
CEA’s level of participation is at the discretion of the client. CEA principals would typically work in conjunction with the lender and company management in developing and executing a disposition strategy. In most cases, CEA would not be involved with day to day management functions, as there is typically retained company staff for this purpose. CEA’s primary function would be as a facilitator between the client and company, or potentially as a final authority regarding key determinations during the sales process.
In the example of an inventory liquidation, CEA would typically serve as a resource to the lender in providing guidance as to the steps that must be taken to maximize net dollar recovery. This scenario requires establishing a marketing plan, potential terms of sale, and a timeline. For the duration of the sale, the establishment of offering prices or offer acceptance must be measured in concurrence with the time and cost involved in consummating a transaction. The purpose of any liquidation is to maximize the net recovery.
In scenarios where there is an uncooperative borrower or where a management team is no longer available, CEA principals would be more hands on in the process. However, CEA is not structured to place a full time team of salesmen, shipping, billing, and warehouse personnel and would typically solicit former employees as part of the process.
As previously noted, CEA is not an auction company or equipment broker and does not buy and warehouse equipment for subsequent resale. CEA’s role in an equipment liquidation could entail the selection of an auctioneer or broker and in structuring the contract. In the case of an auction sale, once an auction firm is in place, they would be relied on to make the decisions necessary to maximize value return. CEA can serve in an oversight capacity during this process as required.
An orderly liquidation typically entails the sale of a portion of the equipment via an orderly sales process with the remainder being sold via public auction. This process involves multiple decisions about what to sell and when to sell in conjunction with weighing offers from prospective buyers. CEA would provide oversight and serve as a sounding board with possible final authority on key determinations. In an equipment liquidation, CEA would not serve as the primary broker and would not be involved in the solicitation of offers or management of potential buyers visiting the facility.
For additional information regarding our liquidation support services, or for questions regarding appraisal projects that may ultimately require liquidation support, please contact us.