Understanding Used Material Handling Assets I
Those cable TV shows like American Pickers really make it look easy. They know what to pay, what they can earn and how much risk is involved when they are combing through other peoples’ forgotten storage sheds and shuttered semi trailers. They are able to spot potential where others might call it simply “junk” and assign it a dollar figure.
To call it “scavenging for profit” would be a little bit harsh – however, they clearly display a talent for finding diamonds in the rough. And, at least on TV – everybody wins. The original seller get money for something that is just taking up space; the final consumer gets a rare find for a bargain price – and, the Pickers make a fair profit for their knowledge, negotiating skills and penchant for risk-taking.
Certainly it’s an overly glamorous comparison, but this accurately approximates the core business model for successful companies in the used material handling industry; minus, of course, the TV cameras and crotchety farmers with shotguns!
In the used material handling business, companies are often involved in multi-party bidding for the rights to purchase the assets of shuttered businesses, closed plants or relocated shipping hubs. It is up to the appraising and negotiating acumen of acquisition agents to determine the potential worth of the offered assets. Many times, facility assets are offered in total – and, it is clear to all involved that many items in the parcel are no longer valuable on any open market.
Knowing the amount resold equipment might fetch and understanding the risk involved is part of the science and art of this industry.