If a liquidation sale looks worthwhile, the next step is to decide what type of sale to hold. One, or a combination of several, of the following types of sales may be appropriate:
Negotiated sales in a distress situation are desirable but uncommon. Logical buyers include your competitors, customers, suppliers and landlord. For example, if you own a restaurant, your landlord may be interested in purchasing your equipment so that the premises can be rented to a new operator at a higher rate.
Consignment sales are appropriate when time is not of the essence; your assets are easily movable; and there is a local dealer specializing in the type of items you want to sell. If you choose a consignment sale, you will need to turn your assets over to the dealer who will sell them and pay you an agreed upon amount following the sale.
Internet sales are rapidly growing in popularity and importance. Before deciding whether to sell online, familiarize yourself with the rules and your legal obligations as a seller by reading the Internet Auction Guide. You may also want to consult a traditional auction company, since many are now able to accommodate simultaneous in-person and online bidding.
Sealed bid sales are appropriate when confidentiality is important. All the bids are submitted in sealed envelopes that are opened at the same predetermined time and place.
Retail sales, also known as Going-Out-of-Business Sales, are appropriate for consumer items like small appliances, gifts and gadgets. They are also a good way to sell shoes and clothing since people don't like to buy these items unless they can try them on first.
A retail sale followed by an auction works particularly well for some businesses. For example, if you are trying to close a grocery store, you can start with a retail sale to dispose of the food and follow it up with an auction to dispose of the shelving, freezers, cash registers, shopping carts and other miscellaneous items.
To protect consumers from unscrupulous retailers who falsely claim to be going out of business week after week, year after year, many states now regulate Going-Out-of-Business Sales. If you want to conduct such a sale, be sure to research the law in your area.
Public auctions are appropriate for most business assets. Typically, your property is sold item by item to the highest bidder. You may, however, also be able to take advantage of the aggregate bid process, which can result in a considerably higher sales price. This works particularly well if your landlord is willing to pre-qualify the bidders as tenants. For example, suppose you want to sell a laundromat. Each washer and dryer can be auctioned separately, the individual bid prices totaled and the bidding reopened on all of the items for an amount that is higher than the aggregate amount of the individual bid prices.
The aggregate bidding process also works on a smaller scale. For example, a bulldozer can be auctioned separately from its ripper. The bids can then be totaled and the machine and its attachment offered as a package subject to a minimum bid higher than the aggregate amount of the individual bid prices.
