An auction can boost cash flow

TOUGH TIMES: BUSINESS RESCUE NOT ONLY OPTION ‘Managers or owners merely need to raise capital without incurring debt.’

Auctions can help many companies avoid filing for business rescue by securing a non-loan capital injection to correct negative cash flow issues and continue operating.

That’s the word from Park Village Auctions (PVA) director and head auctioneer Clive Lazarus, who has overseen hundreds of business rescue and liquidation matters during PVA’s 39 years in auctioneering.

“A large majority of the business rescue matters that we oversee need not reach that point,” said Lazarus.

“The owners or managers merely need to raise capital – without incurring debt from loans – to buy them time to implement better cash flow strategies, like reducing costs, increasing turnover and optimising application of resources.

“While restructuring the business to improve efficiencies, owners can identify superfluous or redundant assets for disposal.”

According to Lazarus, auction represent the ideal method of disposal for numerous reasons:

An auction sale (be it public or online) is a useful outsourcing model that enables a business to focus on its core activities while converting the assets into cash.

There are no selling price negotiations. Bidders know the market-related value and a pre-determined budget. They bid as they see fit.

The lead time to realise the cash is much shorter as the assets are considered sold on the fall of the hammer.

There are no suspensive conditions.

There is a finite period in which buyers must settle.

In light of their extensive experience as professional valuators, PVA is often called an advisory role in business rescue matters (over and above facilitating disposal of assets).

Lazarus encourages those who feel the pinch of the current economic downturn to consider making changes to run “lean” rather than risk selling or closing their business.

“We want to see as many businesses survive this storm as possible. A few smallchanges in business operations and processes can make all the difference,” he said. – Citizen reporter about business restructuring and asset disposal, visit parkvillageauctions.co.za or e-mail auctions@parkvillage.co.za.