Bid4Assets.com has helped more than 20 dying dot-com businesses dispose of assets during the past five months including Boo.com, CivicZone.com, Deja.com, eCitydeals.com and Value America.
The company's sales have included computer equipment, industrial equipment, furniture, fixtures and intangible property totaling more than US$10 million.
The company has developed some expertise in dot-com sales, and offers some basic guidelines for maximising the returns for those high tech companies who need to sell off some of their assets.
First, "Act Fast" - the quicker a seller acts, the higher the return. Technology assets are perishable. Because of the product cycle for technology is so short, even a one-month delay can cause a depreciation of value of technology assets.
Second, "Look Deep" - unlike traditional manufacturing and service companies, technology and Internet companies tend to own intangible assets that have value. These assets include domain names, customer lists, patents, trademarks, source code, digital images, licenses and software.
Third, "Cast a Broad Net" - the best way to sell assets from an Internet company is on the Internet. Selling on the Internet produces the broadest possible exposure for assets. The broader the marketing reach, the greater the pool of bidders. And the more bidders that are attracted to a sale, the higher the likely return. For example, more than 6,000 bidders viewed the assets of Internet retailer Value America online last fall and buyers from 16 states purchased the assets. Many of the bidders represented other technology companies seeking to grow their business.
Fourth, "Know Your Options" - some of the companies Bid4Assets has worked with had filed for bankruptcy, while others chose to cease operations and liquidate assets without filing for bankruptcy. Sellers facing a shutdown typically have three options: cease operations and liquidate assets quickly, file for Chapter 11 protection, which allows the company to protect itself from creditors while it attempts to reorganize toward profitability, or file Chapter 7 and liquidate all assets through the bankruptcy court.
"By offering both online auctions as well as traditional outcry auctions, we provide our customers with multiple solutions to meet their needs," said Tom Kohn, Bid4Assets' chief executive.
Last week, the company announced it has teamed up with Schottenstein Bernstein Capital Group to dispose of assets related to Deja.com. A traditional auction will be held to dispose of a large amount of computer equipment including servers, laptops, desktop computers, monitors and other equipment from Deja.com and another failed dot-com, Kohn said.
On average, assets that sell on Bid4Assets have netted at least 30 percent above the reserve price set by the seller and have sold in days instead of months, Kohn said.
For example, Bid4Assets recently conducted a traditional, open-outcry auction for Broadband Infrastructure Group or BIG. The auction attracted 300 bidders, more than twice the expected number, from six states to a hotel ballroom. At the auction, computer equipment, furniture, telecommunications equipment and copy machines were sold for more than $600,000.
Bid4Assets conducted an online sale for Value America, which filed for Chapter 11 bankruptcy protection. To support the online sale, Bid4Assets provided all the necessary offline services including valuation of assets, removal and settlement. The auction received 28,000 page views and 120 bidders from 16 states who placed 449 bids, bringing returns totaling 16 percent more than the seller's asking price.
"PwC has seen an increase in restructuring activity in the high tech sector," said Marti Kopacz, general partner at PricewaterhouseCoopers Business Recovery Services practice that handled the Value America Chapter 11 asset sale.
"Value America, for example, drastically reduced its staff and needed to sell excess equipment and furniture to generate cash. The key was conducting a quick sale and moving on."
