Auction sales can help in tough times

● Auctions represent a fast, reliable way to convert assets into cash when companies face troubled times, says Clive Lazarus of Park Village Auctions (PVA).

“2018 has been a turbulent year, with the rand’s performance resembling an ECG report,” he says.

“This had an unfortunate impact on many businesses that were not able to weather the storm on their own.

“As such, our business rescue division was particularly busy throughout the year.”

Before reaching the point of filing for business rescue, Lazarus suggests that businesses can opt to strategically dispose of assets via auction to free up much-needed cash.

He says auctions are an efficient way to generate capital and a superb mechanism for reducing costs and optimising business performance.

“Identifying and disposing of superfluous or redundant assets via auction allows businesses to curtail holding costs, wear and tear and shrinkage.

“Public and online auctions appeal to sellers and buyers alike — it’s a win-win for all.

“Sellers can effectively outsource the sale of goods, enabling them to continue focusing on core business.

“The nature of auctions dispenses with sales negotiations and facilitates the realisation of assets at market-related prices.

“Lead times are generally shorter than traditional sale methods, and the agreement is final, with upfront payment required to conclude the deal,” Lazarus says.

To illustrate the value of auctions as a means of asset disposal, Lazarus gave examples of what PVA achieved on behalf of clients throughout the year. All prices listed exclude VAT and buyer’s commission.

● Residential dwelling, Umhlanga Rocks, sold for R5.35m;

● Retail vehicle showroom, Bryanston, sold for R11.6m;

● Specialist shaft-sinking concern, equipment and assets, sold for R12.7m;

● Boutique hotel and residential apartments, Milpark, sold for R12.8m;

● The former premises of The New Age Media, sold for R29.5m;

● Industrial property (5.2ha) in Germiston, heavy engineering equipment and assets, sold for R30m and R3.446m respectively; and

● Engineering workshop and specialist laser and plasma cutting machinery (VR Laser Services), sold for R34.5m.

Notable commercial vehicle auction prices achieved include:

● A 2016 MAN TGS 27-440 truck tractor sold for R565,000;

● A 2015 Caterpillar 428F backhoe loader sold for R570,000; and

● A 2016 Scania R500 LA truck tractor sold for R950,000.

“Gone are the days when auctions were viewed merely as a forced mechanism for recouping bad debt.

“Today, organisations can freely choose to sell their assets at auction given the inherent benefits associated with this method of selling.” Lazarus says.