What Makes a Relationship Between a Lender and an Auction Company Crucial
Often overlooked in an agricultural lender’s world is the value that an auction company plays in certain processes. From an outsider looking in, it is often assumed that the auction company’s role is the last resort to a problem and that they simply sell assets to provide cash to the lender to pay off the debt. However, there can be much more of a consultative approach to it if you have the right relationship with the right auction company.
Engage an auction company early in the process
Unexpected situations are bound to happen and oftentimes what you do in the beginning can alter the outcome. With the proper relationship in place and engaging an auction company early enough, they can provide insight into the best solution for both the client and the lender. Their in-depth industry knowledge can provide solutions to free up cash for the client and keep the business going. When an auction company is brought in as a last resort, the solutions become limited and may ultimately force the client to liquidate.
Think of an auction company as consultants
An auction company can do an appraisal to get an estimated value on any type of equipment. Once this is done, the auction company can be the liaison between the customer and the lender on topics such as the utilization of certain equipment, whether to sell and purchase something at a lower price, and the difference between owning and leasing. With an auction company’s knowledge of the market, they can help with decisions to free up cash and make the business more profitable.
Appraisals are key
An appraisal is an unbiased valuation of equipment that is accurate and defensible. Appraisals can be used for a variety of things from balance sheets to being an aide in unforeseen situations or assist in making the decision between buying new or used equipment. They can also help determine what a future picture might look like for the client and decide whether an auction is needed.
The relationship between a lender and an auction company is most beneficial when both parties are brought into the situation as soon as a problem arises. Both companies can work together to come up with a best-case scenario for the client, whether that be redistributing equipment funds or conducting an auction for retirement. A lender should see and utilize an auction company as an unaffiliated 3rd party to help.
To learn more about how an auction company can help, contact Steffes Group at 701-361-0440 or visit us at https://steffesgroup.com/Home/Contact.