Overcoming The Challenges Liquidating Capital Assets

When a business or department closes, one of the main challenging aspects that business leaders must subsequently face is to liquidate its capital assets—namely the equipment used throughout the business’ lifespan.


Image source:caeonline.com

Liquidation is a complex process involving extensive diligence involved throughout the selling process. Before liquidating, the business’ management must first conduct an extensive inventory of its assets. Leased items should be returned to their owners, as would excess inventories to their suppliers should the terms be favorable. Creditors should also be informed and consulted of the intention to liquidate.

The goal of liquidation is to convert as much of the company’s physical assets into funds, which would either be used to pay off debts and creditors or allow the company’s owners to cash out of the enterprise. Assessing and appraising the value of each item is the next step. This allows the sellers to identify the amount of money they can expect to generate.

Assets are often sold at prices much lower than that of their prevailing market value due to depreciation. This is usually not an issue, especially when the seller’s primary goal is to earn as much cash as quickly as possible, thus, sellers often add in deep discounts whenever possible (and as permitted by their creditors). Items still being paid for should be retained if the resell value is significantly less than the original price.

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Image source:caeonline.com

One of the biggest challenges that sellers must face is finding buyers. Some inventory items sell more easily than others. Office equipment and general-purpose vehicles often have an army of ready buyers within the area looking for a bargain. Specialist heavy equipment, meanwhile, may require reaching out to buyers across the country or overseas as well as careful logistical planning and professional assistance throughout the selling process.

Ryan Jacob is the chief executive officer of Capital Asset Exchange and Trading (CAE), a leading trading and investment platform committed to bringing buyers and sellers of specialist industrial assets together. Visit this website for more on the company and its approach to industrial capital asset markets.

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