Liquidation is sometimes a necessary component of business bankruptcy. However, there are a number of other ways that liquidation services can be utilized that have nothing to do with insolvency or filing for bankruptcy. Because liquidation services are so often used for business closeouts there are a number of misconceptions about what liquidation services actually are and how they can be used in positive and helpful ways.
Here are a number of frequently asked questions about the basics of liquidating and general types of liquidation services:
What is liquidation?
Liquidation is the process of selling off or “redistributing” a company’s assets when the company is voluntarily or involuntarily closing.
Why would anyone voluntarily liquidate?
Company heads sometimes decide that it is in their best financial interest to liquidate part or all of the business. The cost of doing business may be getting to high and so liquidation is used as a strategic move to help keep the company in business or to close before the company becomes indebted to creditors.
What can be liquidated?
Anything that can be considered an asset or commodity can be sold. These assets can include property, inventory, and equipment. Some businesses may even work with a professional liquidator to sell off excess inventory or old unused equipment in order to make room in their warehouse for new incoming stock.
How is the value determined?
The liquidation company will have an experienced, on staff appraiser who will use his or her industry knowledge of asset types, fair market value, and method of sale to appraise the liquidation value.
Depending on each unique situation the assets can either be sold for a flat rate as one large lot or auctioned off at an organized sale.
Are liquidation services just for businesses selling assets?
No! As a matter of fact, many private individuals take advantage of liquidation services, like estate sales, when a loved one passes away or if they are selling a home. In addition, business owners can have a business appraisal done for legal or or insurance purposes.
For more information on liquidation services like estate sales or business appraisals, please visit our website here. Or to contact us, please fill out the Quick Contact Form to the left hand side of your screen.