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• Main Article • The Auction Method • Associations • Photo Gallery • Auction Results |
The Auction Method: Fact or Fiction?Ever since sellers of goods and equipment decided it was a quick and efficient way to convert products into cash, the auction method has been a popular tool of asset managers. Still, despite the fact that auctions have been around for centuries, there remains a great deal of misunderstanding and a general lack of knowledge about the auction method. It is vital that asset managers recognize the "facts" of the auction method so they can properly use this extremely valuable liquidation tool in their quest to obtain the highest dollar for the lowest cost. There is a good reason why auctions have existed for so many years - the auction method, when utilized properly, works. Asset managers who take advantage of the presence of a competent auction professional usually find that the ultimate return on value is greater because of the speed of the conversion from asset to dollar and the lower liquidation costs. A qualified auction professional can actually add value through his ability to reach the precise market for the goods to be disposed. Of course, the greatest advantage of the auction method is the existence of competitive bidding. Sounds great, so what's the problem? The problem is that too many asset managers have been victimized by misinformation or their own misconceptions, allowing themselves to miss out on a great opportunity to discover the added benefits of a well-run auction. Maybe they have been poisoned by dealings with one of the incompetent, or worse, unscrupulous outfits that pretend to be auction professionals. Whatever the cause, failure to distinguish the "fiction" from the "fact" can prove costly. The market is filled with companies who have lost potential income by failing to identify all possible markets, by mistaking the true value of their material, by ignoring the available expertise of a qualified auction professional, by not taking advantage of competitive bidding because of an overconsideration of possible risks, and by not mitigating the actual risks and culpabilities. This problem is easily solved, though. To find the "truths" of the auction method, an asset manager need look only as far as a legitimate, qualified, professional auction company. A qualified auction company has several things going for it, not the least of which is a solid reputation for integrity. Longevity, good word of mouth, a wide customer base, product knowledge, attention to detail, depth of employee base, a large mailing list of prospective buyers, a history of service, and geographic scope - all these are requirements for an auction company to be listed among the best. There are auction professionals out there that fill these requirements - I'd like to think that my company is one of them. No matter if the decision is whether to use the auction method or what auction company to choose, an asset manager must be aware of certain issues. The cost of any method of asset disposal includes "hidden costs" that cannot be ignored. There are always issues dealing with civil, criminal, and environmental laws that need to be anticipated. Failure to reach the proper market could cost tens of thousands of dollars or more. Geographic location and the timing of the event also factor into the equation. A legitimate, professional auction company knows how to solve the equation, though. Asset managers just need to find one, a task that really is not as hard as it sometimes seems. They must be wary, though, of the perceptions and opinions of those who are not involved in the market on a daily basis - those perceptions and opinions are often wrong or misleading. The responsibility of effective asset disposal is an important part of running a good business, so why let those who do not understand the "facts" of the auction method taint the decision-making process. Sometimes in life, truth might be stranger than fiction, but in the auction business, truth is definitely more profitable in the long run. Excerpt from article written by Michael J. Hunyady, President, Hunyady Auction Company |
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