RICK SCHMITT, EXECUTIVE VICE PRESIDENT
AND PRINCIPAL, ACCUVAL ASSOCIATES,
INC.: I would throw in there that, certainly
from the standpoint of understanding
values, it was a moving target, and,
therefore, quick access to current auction
sales data has been really key in keeping
up with the changing marketplace. From a
machinery and equipment standpoint, the
auction environment increased significantly.
At AccuVal during 2009, we tracked and
analyzed the auction results of over 2,000
sale events, from hundreds of different
auctioneers around the world. That’s
hundreds of thousands of transactions. Our
historical database has millions of records
from prior sales. On a real-time basis, this
data allows us to definitively identify the
changing markets and the impact on asset
values. By tracking information from so
many liquidators, we get a better, broader
perspective of the market and are not
relying on a smaller universe of just one
company’s liquidation sales.
In some industries, there were a number of failed auctions that happened in late
2008 and early 2009 where limited or no assets sold. The home construction industry
shut down when demand for the products
came to a complete halt and, in turn, the
value of a lot of the equipment used to
produce those products also dropped
sharply. In some cases, equipment offered
and unsold at auctions sat idle, waiting
for demand for the products produced to
increase so that the equipment’s value
would improve.
With regard to real estate, we found
that, in many cases, the ability to pre-
dict value and demand in these market
conditions was extremely difficult simply
because there were limited to no buyers in
the market. Even those buyers that were
trying to take a very opportunistic look
at the future had very limited access to fi-
nancing to support purchases. The market
included a lot of bottom feeders acquiring
real property on speculation. Comparable
sales were all distressed and thus there
was a convergence of liquidation and mar-
ket values. Similar to what Tom indicated,
buyers didn’t have access to capital, so
many were unable to make the most of the
opportunities that were out there. Real es-
tate continues to be a challenge going into
2010, both in predicting the time needed to
sell a property along with its market value.
COVE: Are there certain types of assets
or collateral that have proven to be more
challenging to get an accurate valuation
on in the kind of current economic
situation we’ve been experiencing?’
DRATT: I think if we’re talking about
machinery and equipment, we would
focus on three categories: large metal
stamping, plastic injection molding and
thermoforming.
COVE: Is that mainly due to troubles in the
auto industry?
DRATT: I was going to say particularly as they
relate to automotive. On the other hand,
based on our auction experience in the last
120 days, we have seen a relative bottoming-out or pick-up in some of these assets,
particularly those assets which are newer.
As Tom, I’m sure, will agree, because
Hilco and Gordon Brothers often part-
ner on large retail inventory disposition
transactions, when you look at the whole
universe of assets to be valued, the one
that has the most data points would be the
easiest to value. In my mind that would be
retail inventory, wherein an appraisal is
essentially an equity bid.
Left Column:
Brian Cove
Tom Scotti
Right Column:
Arnie Dratt
Rick Schmitt
