The Truth About Online Machine Tool Auctions – Manufacturers Expanding Through Acquisition

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online auctions If you want to grow and expand your manufacturing business, gain new customers and add to your bottom line, one of the FIRST places to look is an online machine tool auction. But wait…. aren’t manufacturing companies being auctioned because they have no customers left? No, not always. Many times the manufacturing company still has active customers that need to be serviced. There are a variety of reasons that manufacturing companies close locations. Many times it has to do with a terminal illness of the owner or a family member. In some instances it’s the loss of a lease, or a divorce forcing the sale. Sometimes the manufacturer’s sales figures simply are not strong enough to warrant a traditional business sale, so they opt for an auction. In all of these cases, there are still customers; sometimes they are long-time and loyal customers.

Consider the cost of acquiring new customers through traditional means. This can be an expensive proposition that includes marketing materials, advertisements, press releases, a sales force and an ongoing process of educating new customers on your machining capabilities and products.

Smart manufacturers opt to expand through acquisition because they can get where they ultimately want to be with a speedy timeframe not possible through traditional means; online auctions offer the same speed.

If the manufacturing company selling was in decline, don’t you risk wasting your money on the

New Customers acquisition of a customer list? There is risk in ANY acquisition, whether it’s an ongoing successful business or simply purchasing a customer list that might be stale. There is never a guarantee that customers will stay with an acquiring entity. However, at a certain price level is it not a risk worth taking? I would argue that it absolutely is! Here’s why. Many old timers in the industry don’t market their companies or their services. They simply wait for the phone to ring, because that’s all they had to do in years gone by to have a successful business. Younger manufacturers understand that the rules of engagement have changed. The phone just doesn’t ring; you have to MAKE it ring by being found on the web and social media.

The younger generation understands that they can take a stale customer list and with a few very inexpensive tweaks and communication methods, turn some on that list into long-time loyal customers.

How much is one long-time and loyal customer worth to your business? Do you see my point? By purchasing customer lists at online machine tool auctions you have the opportunity to acquire long time customers for a fraction of the cost of traditional means. A word of caution when making these types of acquisitions. Make sure you know exactly what you’re getting. Is the customer list a file cabinet, or in electronic form? If there is an active web site and company phone number, you’ll want the acquisition to include those items too. Both can be forwarded to the acquiring company. As an industrial auctioneer I allow a specific due diligence period. Buyers are assured that if the seller does not provide what was promised, they will get their money back. Make sure that is the case BEFORE you bid. The truth about acquiring customer lists via online auction is that it can be risky, but it is sometimes a risk worth taking with a huge payoff! It is an opportunity for the Seller to obtain more for his manufacturing business as it’s closing AND for savvy manufacturers to acquire new customers at a fraction of the cost of traditional means.

About Frances Brunelle

Fran Brunelle is an industrial auctioneer with 20 years experience, a manufacturing business broker, licensed real estate broker specializing in industrial properties, a real estate auctioneer, certified appraiser and author.

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