These firms are typically classified as consulting firms. To achieve the best results, liquidation firms are available with experience in conducting "going out of business" sales for virtually all types of retail stores. The entire or majority of the owner's lifetime savings may be tied up in the inventory, and converting this inventory to cash is critical to the owner's financial future.
Liquidating retail inventory is challenging. (Public companies and multi-unit operations, like major chains such as Target, Staples or Home Depot, also fall into this category, but amazingly enough these companies often wait to liquidate until they are bankrupt! By liquidating their "losers" and focusing on their "winners," both large and small chains could avoid insolvency, but they usually wait until it is too late.) Independent stores, apparel and shoe stores, sporting goods stores and furniture stores are in this category. Businesses whose assets directly produce income - These are retail storefront businesses and, for our discussion, are independently owned and operated.These assets can be sold to similar types of businesses, sold or consigned to used equipment dealers, or liquidated with the assistance of an industry-specific auction house. Businesses with assets used as tools in the direct production of income - This would include restaurants, manufacturing and construction companies.The liquidation value is extremely limited and can usually only be sold to used office equipment dealers, although an auction is sometimes viable. Businesses with assets used indirectly in the production of income - This generally includes the furniture, fixtures and equipment (FFE) of a service business, such as insurance agencies, attorney's offices, etc.There are generally three categories of business that will liquidate assets: So just what is the liquidation option? It is the direct conversion of assets to cash by selling them to a user/consumer. Most prefer to purchase their own new assets (equipment or inventory) and start a new business rather than buy an existing one. The vast majority will not pay for goodwill or "blue sky." They will discount your inventory and pay far less than cost. Most with the required assets and credit lines required to buy your business will not want to invest for the same reasons your heirs have declined the opportunity. Potential buyers are few and seldom truly serious. And even if you were near or at insolvency, you'd probably find it preferable to liquidate your assets and negotiate amounts owed to your creditors, while at the same time avoiding the stigma of bankruptcy.Īnd finally, you have come to realize that selling a business with significant assets is much easier said than done.
Moreover, your business is at least solvent or near-solvent, so bankruptcy is not an option. Or they simply are not capable of continuing the business. And they're attracted to the high salaries and benefit packages offered in the corporate world. They have been too close to the business for years and know the 24/7/365 routine required to be successful in many small businesses. The reasons for this are numerous: Your heirs may want nothing to do with a takeover or succession plan. But for many small business owners, liquidating assets is often the best or perhaps only feasible method of exiting their businesses, especially retail businesses. Selling a company to an interested buyer is the method most commonly associated with getting out of a business.
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