What is Investment Recovery ? WIth the changing landscape in Manufacturing , companies are looking to “Investment Recovery” to maximize the return on idle assets. Many gurus , consultants, and charlatans are touting their ” science” of investment recovery. However, a little common sense, aligning of compensation with performance, and being a market maker are still the best method to achieve actual Investment Recovery.
T&T has developed system, process, and have worked with many Fortune 500 customers and industry leaders in investment recovery business. We employ a comprehensive, and customized approach to each of our customers’ investment recovery initiatives, from the initial project scope and risk assessment through to final project review with our customers. T&T Machinery ensures the highest possible returns for our customers while carefully managing all risks associated with asset redeployment, investment recovery, and salvage projects.
The strategy to remarket your surplus plant property and assets will be mainly determined by the size and character of the lots available. Our result oriented strategy follows a standard format proven by our past experience.
In the face of our changing economy, with increased competition, consolidation, and the globalization of markets, companies are looking to internal efficiencies to increase profits and reduce waste. In light of achieving these bottom line goals, our Asset Recovery Systems are tailor fit to corporate objectives. We can help you manage your assets throughout the production lifecycle in terms of highest recoverable value.
With the added benefit of redeployment within other operating units, we free valuable personnel the cumbersome task of managing surplus assets, leaving our clients to pursue their corporate objectives for profitability from continuing operations.
Other service can be provided in conjunction with and stemming from investment recovery services:
- Appraisals and audits of operating assets to determine value and efficiency of operations
- Consulting services for packaging machinery – to determine best fit for production
- Standardization of machinery specifications – to maximize serviceability and reuse
- Consulting to increase efficiencies in operations , plant cleaning, salvage, and environmental Issues
T&T Machinery is compensated from sell thru of assets, and for services provided.
Compensation can be negotiated in the following ways :
- Commission – A percentage is paid of gross proceeds
- Flat Fee – based upon total project value
- Purchase/Buy out – assets purchased outright from seller, allowing deferment of risk and involvement for seller
- Guarantee w/ equitable split – potential of greater return w/ seller participation
All compensation options will be in accordance with customer corporate policies and objectives.
Description & Tagging
Plant and Machinery assets will be inventoried, tagged, and given a descriptive “write up”: model, s/n, age, original price, general condition, comparison to estimated “book value” and depreciation schedule, photograph, size set for, and adaptability.
Data will be put into in Excel Format for analysis, with hard copies, photos, and manufacturer’s information will be kept as reference and backup. In an effort to capitalize on Redeployment opportunities this asset information can be shared via online private listings or company intranet. Appraisal of plant assets can also be provided,giving management a tool to verify audits and check on profitable operation of facilities.
A facility specific strategy for redeployment and liquidation of assets is then formulated. This will entail redeployment plan based upon customers’ corporate objectives, and best method of sale. All lots will be evaluated on an asset-by-asset basis, matching the most suitable disposition for each asset.
T&T Machinery will assign each asset with one of the following disposition choice, in order of greatest benefit to client(s):
- Re-deploy internally (highest value)
- Sell directly to end users (higher return)
- Sell to dealers (higher velocity)
- Donate (tax savings, goodwill)
- Scrap & Salvage (eliminate liabilities, remuneration metal and component value)
Determining Market Value
Market value is determined by many factors, therefore a standard group of criteria are used:
- New pricing of comparable machinery
- Market availability
- Competitors pricing and actual prices being paid by end users
- General condition of piece, age, flexibility and adaptability for reuse, removal and relocation costs
- Book value
- Obsolescence, and new technology available to users
As a market reseller we have the distinct advantage of being “in the market” with a first hand knowledge of current trends and values. This knowledge of actual “market value” allows a realistic determination of value, obsolescence of machinery, and shifting of process – valuable in determination of “make or buy” decisions for new product lines.
Administration of Sales
Marketing and Promotion
T&T Machinery is one of the market makers in the used process and packaging industry . Being “in“ the market gives T&T the advantage of knowing current values and trends in the industry. Effective use of our database and acquired lists, as well as use of proven marketing methodology , we will contact the greatest number of potential customers using a four part Marketing Plan:
- Print: Full color brochures sent to prospective customers from database and acquired mailing lists
- Online: Marketplace website: www.bidonequipment.com , online listings using web based formatting of asset catalogue.
- Emails and Direct faxing
- Direct marketing: calls to prospective customers and market makers to bring more customers to the sale.
Targeted resale in order of greatest recovery to our clients:
- End Users as they provide the greatest yield, and are target first- yielding Market value
- Dealers and Wholesale, dealers w/ customers and those looking for inventory yield lower return as commissions and Dealers costs of doing business are considered in sales price.
- Unsold lots- Remaining lots are then re-evaluated for either consignment(future sales) or salvage(recovery of metal value, avoidance of liability)
Administration of Sales & Removal
All sales of machinery will be fully documented with copies of invoices and receipts kept on file and recorded in Standard accounting format. Reporting can be tailored to fit client corporate accounting requirements.
Mechanical and check out services will be provided by T&T Machinery or approved contractors, these include:
- Rigging and removal
- Crating and skidding services
- Transportation logistics and shipping
These services will be paid for by the buyer, negotiated rates will be established for machinery transferred to other facilities.
Salvage Operations Provided
- Destruction of proprietary machinery
- Repair of facilities for resale and plant cleaning
- Recovery of electrical components, piping, and saleable metals and packaging supplies
Administration of Program
Best Method of Sales
Best Method of sale is next determined based upon market conditions, nature of assets and location. Considerations include: environmental and legal concerns, OSHA regulations concerning resale of equipment, current and future marketability of assets, and associated costs involved with sale of assets.
Letters are sent to prospective bidders and advertisements are placed inviting bids on lots of machinery .Bids are opened at a specified time and awarded to highest bidder(s).
Although this may seem a fair and logical method, it tends to yield poor return for the seller. This is due to the fact that it inhibits competition and limits opportunities for sale -less customers wish to bid on large lots, and many are intimidated by the formality of this format. This format is actually quite beneficial to dealers who buy in lots and are willing to take risk.This format is usually associated with large corporations ,accounting, governmental, legal firms handling disposition, and engineering consulting groups.
Consignment of Facility or Line for Sale in its Entirety
A line or facility is generally worth more in its entirety than as the sum of its parts. Therefore, if there is no “rush” to liquidate a plant or facility , we can look for the best opportunity sale netting the greatest return. This brings to bear the full potential of our remarketing efforts and can ease transitioning of facility and workers.
Following inventory of machinery, advertising in trade journals, development of brochures and direct marketing would be used to announce the liquidation. The liquidation would run for a specified period of time during which prospective customers would be invited to inspect and purchase machinery and assets on a first come basis.
The entire plant or lots are auctioned off at one time. Standard advertising is placed, brochures sent, and direct marketing are used to attract the greatest number of customers. In recent years auctions have been a very good with greater numbers of end users attending.
The excitement, urgency and competition between customers bidding result in higher prices being bid for items. Return on “pickup” or ancillary equipment is greatest at auctions – which is a value added gain of this option, as much of this equipment is not salable outside of the plant location.