Gauteng Business News

Send  Share  RSS  Twitter  15 Feb 2010

BUSINESS: Realisation Of ‘Locked Up’ Capital Crucially Important


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The current economic challenges emphasise the need for business decision makers to reduce cost, increase turnover and to optimise the efficient application of resources says Park Village Auctions which is a major player in the capital equipment auction market.

The identification of superfluous or redundant assets for disposal is an appropriate step in this direction as it reduces holding costs, wear and tear, pilferage, opportunity cost, and the like and above all generates capital by unlocking liquid cash says Dr. Bertie Saunderson, of Park Village Auctions

One of the quickest and most transparent methods of achieving these objectives is the public auction sale method, he adds and in this respect Park Village anticipates a busy year.

“The ‘unlocking of value’ is a generally accepted business imperative that improves the overall performance of a given business. The conversion of ‘non-core’ assets into cash is one of the ways to accomplish this and within this overall context, public auction sales fit the strategy.

“A public auction sale is an effective outsourcing model that enables a business to focus on its core activities whilst the auctioneer takes care of the sale of non core assets.

“The democratic competitive bidding process has wide appeal in that it dispenses with the tedious selling price negotiations that arise in private treaty and tender sales and it aids the realisation of assets at fair values.

“Furthermore, the lead time between the sale and the final settlement to the seller is fairly short as payment is not hampered by the suspensive conditions that frequently apply in a private treaty sales transaction.

“Indeed, PVA will not release any asset unless payment has been received in full and the payment has been cleared by the bank.

“Moreover, an important socio-economic benefit that arises from auction sales is often overlooked in that start-up businesses and sole traders are some of the buyers at public auction sales.

“Their participation in the buying process enables them to become self-reliant, grow their businesses, employ staff, pay taxes, and embark on the path of active participation in the economy. This is a perfect example of where the disposal of redundant and non core assets can spur 'trickle down’ economic' activity.”

PVA has a national and a regional footprint having executed several public auction sales for various mining houses, the engineering sector, banks, liquidators and the like said Saunderson.

Some of its prominent disposals included the closure sales of assets at BHP Billiton's Douglas Colliery, Rietspruit Mine, Transdeco, ATS Alloys, the farming sector, game lodges, real estate and commercial properties, etc.

“Major banks, mines, finance institutions, corporates etc are among our clients and without exception the auction method of disposal has proved highly effective in most cases, underlining the auction methods’ relevance across a broad spectrum of business,” he adds.


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