A liquidation auction, also known as a surplus auction, allows businesses to get rid of excess inventory. It’s also a way for companies to sell-off inventory before going out of business. In this event, the company needs to raise money to satisfy its creditors.
Given the two examples above, the term liquidation auctions implies “everything must go.” Clearing inventory doesn’t necessarily mean the business is closing. Typically, an auction helps companies maximize the amount of money they get for the products they remove from inventory.
Businesses will usually hire a professional auction company to handle the liquidation sale. The auction house provides a wide variety of services including taking a complete inventory of assets, advertising for the auction and managing the event from start to finish. To find the best auction service for your liquidation auction, you should focus on experience, reputation, services, pricing, schedules and references. Thorough evaluation in these areas will help determine the right auction service provider for your business.
Closing a Business
Conducting a liquidation auction may be voluntary or forced by the courts. In many cases, it’s a step that must be taken before a business closes. In this scenario, the funds generated from the sale of goods typically go to the creditors first. Next, the shareholders of the business benefit from any remaining funds.
A liquidation auction for a closing business not only includes the stock of the company, but every other asset used by the company. For example, if the company produces a product or sells products, these items are auctioned. In addition, other items the company owns, like office equipment, computers, supplies, furniture, artwork and anything of value will be auctioned to the highest bidder.