The Benefits and Process of the Strategic Liquidation of an Indian Company
Liquidation means converting assets to cash by selling them. Many small businesses favour the process of strategic liquidation over selling the company to a buyer when it comes to exiting their businesses. On the other hand, the firm’s heirs may not be qualified enough to take over the business. The heirs also may not be in favour of takeovers or succession plans.
There are other reasons for preferring strategic liquidation. Bankruptcy may not be an option if a business is solvent or near-solvent. A businessperson would prefer a liquidation to avoid getting tarnished with the bankruptcy title. Liquidating assets and negotiating with creditors would be a better option for such a person. Another reason could be that an entrepreneur may be aware of the difficulty in finding serious buyers. Potential buyers may offer lesser prices for the assets since they may prefer to start their business with fresh new assets.
Different Types of Business Looking for Strategic Liquidation
The following businesses may prefer liquidation of their assets to other methods:
Businesses using their assets to earn an income:
Independently-owned retail stores, such as apparel, furniture, or sporting goods stores come in this category.
Businesses whose assets function as tools for earning income:
Restaurants and construction companies are examples of businesses falling in this group. These businesses can sell their goods to other similar firms, or sell to used-equipment dealers, or auction them.
Businesses whose assets contribute indirectly to the income:
This includes service businesses, such as insurance agencies or solicitors, to name a few. Their assets are their furniture, fixtures, and other equipment that are sold through auction or to used-equipment firms.
Why Hire a Liquidation Professional?
Liquidation of retail stock is a crucial and difficult process since the owner may require the money tied up in his assets to secure his financial future. Every business needs a customized liquidation process, and so, it is always better to leave the work in the hands of a professional liquidation firm. Such a firm will analyze the business properly and develop an appropriate strategy like a ‘Going out of business sale’ or a Creditor sale to get maximum value for the assets.
How Does a Liquidation Professional Work?
Strategic liquidation has many challenges, and a professional firm can make the process smooth for you. Such a firm will possess the experience to conduct the liquidation process for any type of firm and will be able to resolve any issue that may arise.
These are some of the strategies used by liquidation professionals:
- They may employ techniques like template advertising that enable them to start sales in a very short time. Sometimes they also devise customized plans suiting the business after conducting a detailed analysis over a period of time.
- They may offer discounts for each department for your store, re-price your assets, or fix an overall discount rate for the entire store.
Tips for Achieving Optimum Results in a Strategic Liquidation
The following tips will help to get the best results in the liquidation process:
- By keeping the sale short, overheads can be reduced.
- The sale should take place at an appropriate period of the year.
- Fixing appropriate price markdowns are essential.
- A proper promotion process is a must to support the actual sale of the assets and store closure.
Things to Consider Before Hiring a Professional Liquidating Firm
You need to consider these points before hiring a liquidating firm:
- They should provide you with all the details of the entire sales process.
- The firm and their representative should have relevant references for the sales they have conducted previously.
- Their rates must be transparent with no hidden costs.
- Their business philosophy should match with yours, and you should be comfortable dealing with them.
Strategic liquidation is a crucial one-time process that needs to be executed flawlessly to get the maximum results. Since you cannot afford costly mistakes, hiring a professional liquidation firm is the best decision you can make. 3E Accounting is well-versed in providing secretarial services and has an experienced and skilled team to handle all the necessary legal formalities for such liquidation processes. You can call us to have the best liquidation Secretary in India work for you.