More than 15 years ago I wrote an informational piece on “How to Choose An Industrial Auctioneer To Sell Manufacturing Equipment.” So much has changed in the way manufacturing equipment is sold that the subject warrants a revisit. Although I would still recommend everything in the original article, there are new considerations based on current technology, that if ignored could be disastrous for the bottom line results of your machine tool auction. Before we proceed, here’s a brief review of the 8 original recommendations:
1. Written Contract: Make sure you have one and the responsibilities of the auctioneer are clearly spelled out.
2. Advertising: The contract should be SPECIFIC about the advertising that will be done to promote the auction. If it’s not in the contract, the auctioneer is not obligated to do it.
3. Reputation: If the person you are considering using as an industrial auctioneer is not well respected in the manufacturing community your results could be negatively impacted or perhaps worse. At the time I wrote the original article, I had a competitor that was selling manufacturing equipment and keeping the proceeds. Yes, you read that correctly, he was not paying the machine shop owners. I make it a practice to NEVER bad mouth a competitor and I won’t start now. However, in this day and age of instant information, there is no excuse for not knowing in advance whom you are dealing with. If you sign up with someone that has gone to jail for stealing proceeds, because he told you what you wanted to hear about the value of your equipment, you deserve what you get! Gosh guys, use some Jersey Girl street smarts!
4. References: Ask for them!
5. Education: Choose an auctioneer that has professional training and preferably one with a long track record within your particular sector.
6. Associations & Memberships: If they are involved with trade associations they are probably required to participate in continuing education and be aware of current technology affecting the industry.
7. Community: Does the auctioneer give back to their community? This might not be an indication of their auction & marketing skills, but it IS and indication of their character.
8. Licensed Real Estate Broker: If you are selling your real estate too – knock out two birds with one stone!
As you can see, the original eight recommendations on how to choose and industrial auctioneer are still relevant and advisable. Here are some new ones for today’s digital world:
9. Online Capabilities: I know that some of you old-timers really hate all this new fangled stuff. But you are precisely the ones that need to listen because you will be selling off your machine shops within the next few years. Our goal is to make sure you get the most out of it for your retirement. If your auctioneer is not using online methods to sell your manufacturing equipment, he is leaving money on the table…your money! Here are some statistics to prove my point: Online sales accounted for $2,283 Billion of manufacturing shipments in 2010, up from $1,892 billion in 2009, an annual increase of 21 percent. These figures include all online industrial auctions, including online machine tool auctions, and online used machinery sales in all manufacturing sectors. From 2009 to 2010, e-commerce grew in all manufacturing subsectors with the largest percentage increase in Primary Metal Manufacturing, (55 percent). Online auctions are projected to grow at a rate of 124.7% through 2019. Based on this information, auctioneers who are not providing online services are doing a huge Disservice to their clients. Also, make sure your auctioneer is providing the online bid service rather than a third party provider. Companies like Bidspotter take a percentage of the proceeds and the auctioneer typically passes that cost onto the Seller.
10. Visibility: When key players at major manufacturing companies are looking for machine tool acquisitions, they are first turning to online search engines. Make sure the industrial auctioneer you are about to choose can be found in Google before Joe Smo’s discount machine tools on page 256,000! Let’s face it guys – there is a lot of competition out there. Everyone is screaming “buy me, buy me.” Your machine shop equipment will sell first only if people can find it first. Making sure they can be found in a Google search, does not mean searching for their name. It means searching under key phrases that likely buyers of your machinery may be searching for, (machine tool auctions, online machinery auctions, etc.)
11. Social Media: Social Media is quickly becoming as important as providing online auction services. How the world obtains information is changing rapidly. Is your auctioneer on LinkedIn.com? Do they participate in all the manufacturing forums? Are they on Twitter, Facebook and Pinterest? If you want the best result possible, they better be! Not only do auctioneers get direct purchasing referrals from all of these social networks, but participation on them helps their ranking in search engines. Thus, everything they do is more visible and that translates into more participants, more competition….and better financial results.
12. Digital Advertising: Make sure that the industrial auctioneer you are considering does a substantial amount of digital advertising. There is a reason the printing houses and the post offices are suffering. People are opting out of the old models of advertising. Not to mention the cost! How can I possibly justify spending 10% of a small machine shop’s proceeds in print and snail mail advertising, when I know I can get a better result for a fraction of the price? I can provide a full color publication with links to the bid site in minutes as opposed to waiting weeks for a printed publication to be delivered, (and the secretary throws it out.) If your auctioneer is insisting on a printed brochure, make sure that they are not printing thousands of extras on your dime to use as part of their marketing material to get future deals. If you are paying for the advertising – you should be able to see a receipt for the quantity mailed.
13. Business Brokerage: What other services does your Industrial Auctioneer provide to the industry? Things like Business Brokerage, Machinery Financing and Industrial Real Estate mean that the auctioneer works regularly with companies within the manufacturing community that are successful, growing and have money to spend. Again, it’s all about getting YOUR machine shop equipment in front of an audience of likely buyers. The more “connected” the auctioneer is to successful manufacturing companies, the greater likelihood there is of success.
I hope you can see that there is a common thread in all of these new recommendations. Its NOT about what an auctioneer tells you they can get at auction for your manufacturing equipment, its more about how connected and “plugged in” they are with successful manufacturers. It’s about their visibility within the manufacturing community, and how they can translate that visibility into cash for you.
So, there you have it. The updated version of How To Choose An Industrial Auctioneer. Following these simple steps will keep you out of trouble and you’ll have a greater likelihood of a positive financial result when selling your machine shop!
Fran Brunelle is an industrial auctioneer with almost 20 years experience, a manufacturing business broker, licensed real estate broker specializing in industrial properties, a real estate auctioneer, certified appraiser and author. Fran has established several corporations that provide services to the manufacturing industry. The “Accelerated Group of Companies” provides tools and services to help manufacturers grow and exit strategies to maximize dollars when they are ready to retire or sell their manufacturing business. The group of companies that Fran Brunelle has established includes:
www.AcceleratedBuySell.com – Provides Online Industrial Auction Services, Used Equipment Auctions, Capital Equipment Auctions, Plant Liquidations, Industrial Plant Cleanout Services, Used Machinery Location Services, Certified Machine Tool and Equipment Appraisals, and more.
www.AcceleratedMfgBrokers.com – Specializes in Manufacturing Business Brokerage and Mergers and Acquisitions. We help manufacturers develop exit strategies to maximize retirement dollars, and successful manufacturers expand through acquisition of other manufacturing companies, product lines and customer lists. Manufacturing Companies for sale throughout the United States are listed on this site.
www.AcceleratedRE.com – Provides Industrial Real Estate Brokerage Services, Online Real Estate Auctions, Sealed Bid Real Estate Auctions and complete industrial facility cleanout services.
www.IgniteMfg.com – Provides funding for products made in the USA, and engineering/manufacturing educational needs through Crowd Funding.
www.MfgWebSolutions.com – Provides web development and social media services for manufacturers at under-market rates.
Fran Brunelle is a contributing author to:
blog.AcceleratedBuySell.com - A site that provides the latest manufacturing news, statistics and opinion. It also provides information on how to grow a manufacturing business, and what to do if you are a manufacturing company that needs to close.
MFGWebSolutions.com/blog - Provides the latest information on social media and web development for manufacturers. It gives manufacturers tips and tricks for boosting their web presence.