Printing owners typically only think about buying equipment. But what happens when retirement or bankruptcy forces you to consider selling heavy equipment, such as printing presses? Working through an auction, you may be pleasantly surprised at your options.
We blog often about valuation and mergers and acquisition. One topic that doesn’t come up as frequently for business owners is how to sell your equipment.
Divesting your assets may be required in the case of bankruptcy, or even if you’re looking to retire without selling your business or passing it on in succession. In either case, we reached out to Rod Backes of Backes Auctioneers for some insights on how to sell your equipment and hard assets.
Turning Assets Into Cash in a Short Period of Time
Backes Auctioneers helps companies sell their heavy equipment. Now in their 41st year of business, Backes Auctioneers has sold printing equipment from mom-and-pop shops to extremely large companies throughout the Midwest.
Reasons for selling vary from client to client. “Some might be upgrading. Some might be closing a facility. It could be an individual piece of equipment, or it could be an entire facility.”
Whatever the reason, taking your equipment to an auction is a practical way to maximize your dollars. Because of the ability to sell online, you can take a piecemeal approach or sell all at once. “It’s a viable way to turn assets into cash in a short period of time,” Backes said.
Process Starts With a Phone Call
For Rod and his team, the process begins with a call. He’ll discuss the seller’s goals, and determine if they want to take the auction route for a large facility, or sell smaller items piece by piece.
The next step is to appraise the equipment. Backes will either appraise individual pieces of equipment for free, or charge for a full assessment of a facility.
Pricing equipment is straightforward when it comes to standard equipment that can be absorbed by the public, such as pallet shelving. For complicated equipment, a more thorough appraisal is required. Backes will reach out to dealers and industry experts to establish a proper price. This can get tricky, especially with digital machines that have software and compatibility issues.
The Auction Itself: On-site AND Online
Once a seller agrees to the auction, Backes conducts it on-site. It typically includes an online component, where people are free to bid over the Internet.
To prepare for the auction, the Backes team “lots up” the equipment, tagging it and preparing for the online sale. Notice of the auction will sent out through Backes’s extensive email list and social media outlets, and in some cases, online advertising will be used.
Once the auction begins, bidding occurs, much like any regular auction. The bidding can open up at any price -- even $1 for a million dollar piece. The bidding will vary based on the asset. The lower it starts, the more aggressive buyers will be.
However, as Rod puts it, “It doesn’t matter where you start, it’s where you end up.”
Sellers Surprised by the Auction Industry
Many sellers have a preconceived notion of what occurs at an auction. That tends to be a far different experience compared to an industrial auction. “There are millions of dollars at these sales, and an extensive amount of due diligence occurs with each sale,” Rod says.
This isn’t like the old days when you take equipment to an auction to dump it. It can be a very strategic sale, and it’s become much more mainstream. Buyers are alerted long before the sale via Backes’s marketing efforts, and they often know the value of a piece before bidding begins.
The market goes up and down, due to changes in the industry, almost daily on the digital side. But one buyer’s “trash” might be another buyer’s treasure. “A lot of equipment that can’t be used here will go overseas,” Backes said.
The secondary market is always strong, although prices will need to be adjusted for shipping and tariffs.
Don’t Get Emotional About Equipment Sales
You’d be surprised, but many sellers have what Backes calls a “social attachment” to their equipment. Buyers will have unrealistic expectations when it comes to selling their equipment, and will expect a much higher dollar amount than what the equipment is actually worth.
Unfortunately, in today’s marketplace, equipment can become obsolete -- fast. “Two years ago, it might have been worth a lot,” Rod said. “Today, you might be lucky to get pennies on the dollar for it.”
Just as we often preach about not getting emotional during a sale and relying on the appraisal, the same can hold true for equipment. When Backes conducts their due diligence, they’re reaching out to new and used equipment dealers for current value.
The best bet is to have zero expectations when you enter into a sale. Forget about what you paid for the item. Just react to the appraised values before putting it up for auction. Who knows? You’re in an auction, so the number might go higher. You just never know.
Size Impacts the Sale and Removal of Equipment
Rod notes that equipment size has the greatest impact on all facets of a sale. For example, a larger press automatically eliminates many smaller companies from a bidding process.
Larger equipment can also stretch the amount of time it takes to complete the process. An auction for smaller equipment may take three weeks. For larger pieces, it could take two months.
It all depends on the facility involved and what the buyer brings to the table. “The smaller stuff we can handle, but a lot of people bring in their own rigging companies,” Rod said.
Take the Next Step
Pricing on the sale of auctioned equipment can vary. You may chose a buyer’s premium, in which the auctioneer receives a commission on a specific piece. Or you can pay a flat fee. It all depends on the scope of what you want to sell and how you want to sell it.
Whatever the pricing method, know that we value the approach Backes Auctioneers takes to the sale of heavy equipment. Full disclosure: Backes assisted the LaManna Alliance in selling over $4 million in printing and finishing equipment from a closed printing plant. The process took less than 3 weeks, thanks to our combined strategic approach and industry connections.
That’s good news for sellers and buyers. Sellers want to move the assets quickly, and you don’t necessarily want to burden a buyer with the cost. To set the wheels in motion for your own business, visit our Selling Printing Equipment page and contact us through the special form. You can receive a LaManna Alliance discount!