When you make the decision to close your business, it may not be feasible to sell, merge with another company or transfer ownership. In these situations, the best option may be to liquidate all company assets. Before choosing this option, it is vital to have a well thought out plan in place to help ensure an efficient and cost-effective process.
Once you have developed a solid plan, you will need to present it to your creditors to garner their cooperation. It is vital while presenting to be candid about your situation and proposed plans – if they are solid you will most likely gain approval, especially if you have a business attorney’s assistance in creating your plans.
Below are some of the steps to take when liquidating business assets:
- Complete a thorough inventory of your assets, including photographs, serial numbers, warranties, brief descriptions and the conditions of each.
- Prepare all items for sale or donation, if applicable. When determining how much to charge for items, consider their condition. Generally, items can be set at 20 percent less than retail value, if they are in good shape.
- Consider any intangible assets, such as business licenses, permits patents, trademarks, client lists, etc. to determine if any of these can be transferred or sold.
- Determine if selling your business assets is worthwhile, when you factor in any costs associated with the sales process.
- Choose the best type of sale for the liquidation of your assets. Some options include consignment sales, online auctions, public auctions, sealed bids and negotiated sales with customers, competitors, suppliers and other parties.
- Select a location for your liquidation sale and, if necessary, arrange for assistance from the appropriate experts, such as an auctioneer, dealer or broker.
Throughout this process, you will depend on your business lawyer, as well as an accountant, to ensure liquidation is in your best interests and deal with these complex issues.
Source: U.S. Small Business Administration, Liquidating Assets, last accessed March 26, 2015