Liquidating Equipment In A Manufacturing Company Merger
Your company is about to double in size. Growth is happening. But how do you deal with all of this manufacturing equipment you don’t need anymore? Company mergers can be exciting events. If your company is involved with a merger, you’re likely looking to expand market share, gain access to new markets, increase your company’s efficiency, or just diversify and offer better, newer, and a broader choice of products. There are numerous types of mergers that are valuable for a business and each provides benefits depending on your company’s goals. But one thing always stays the same. You’ll have to sell the equipment.
In this article, we’ll explore the three common types of mergers and how each could cause headaches for your logistics department when it’s time to combine forces on the production floor of your manufacturing plant. Then we will provide a comprehensive, proven solution to the biggest problem you’ll face on the floor, making room for your equipment.
The Vertical Merger – Overlapping Machinery
Two companies are creating the same products or services, but each company is equipped to fulfill different stages of production. For example, you own a manufacturing company that creates containers made from styrofoam. To streamline the manufacturing process, you’re merging with a company that produces styrofoam. This would be considered a vertical merger. Vertical mergers can be valuable to the overall process of a company. Your manufacturing plant will no longer face troubles with ordering and receiving enough styrofoam, and the styrofoam production company will now have a reliable, steady customer in your business.
You will both be able to eliminate costs in your supply chain and remove repetitive production functions in the process. However, you will likely face a machinery overlap in many cases. While you were not officially “producing” styrofoam before, you probably had several machines that formed the raw styrofoam and so does your new partner. You had a number of forklifts and other floor equipment that your partner does as well. Depending on the size of the two companies, these overlapping tools and equipment can add up quickly. You’re left with a large surplus of unused machines taking up space and causing a logistical headache in your manufacturing plant. How are you going to get rid of the accumulated, extra equipment?
Horizontal Mergers – Duplicate Equipment
You and another company are providing the same products or services to the same kinds of customers. To cut down competition in that particular market, you have decided to combine forces. You have a metal fabrication business and you combine with another metal fabrication plant from a neighboring city. This is a horizontal merger, another very valuable business strategy that allows two companies to scale quicker and more efficiently. You can now offer larger volumes of a product and charge less, giving you a valuable competitive advantage in your chosen market. All the while, you are able to claim more market share. The combined businesses are able to cut costs, produce more metal products, and eliminate redundant manufacturing procedures, giving you a more streamlined process and outcome.
But what about the elephant in the room? That’s right. All of the duplicate machinery that both businesses bring to the production floor. Instead of doubling your amount of equipment, you’ll likely want to invest in larger machines with higher production capabilities. Instead of using twice as many machines and taking up twice as much space, you’ll implement a single machine that can produce twice the results. So what are you going to do with all of the duplicate machines?
Concentric Mergers – Overlapping and Duplicate Equipment
Your company produces wooden cabinets and you’re merging with a company that produces granite counter and table tops. You both serve customers looking to build the perfect kitchen or bathroom, but you provide them with different products. This is considered a concentric merger. A concentric merger is different than the two previous mergers mentioned, but the problems you’ll face on the production floor are very similar. Your new company now has multiple forklifts and pieces of duplicate equipment. You have overlapping tools, lifts, and hoists that will soon be taking up valuable shop space without being used.
Your concentric merger has helped you offer a more diverse set of products, but you’ve got to find a way to simplify and streamline your production process. Your companies are benefiting from shared expertise, but you’re being hurt by shared equipment.
Once again, you are faced with the difficult task of liquidating the equipment you won’t need in your new venture. But you don’t have time to set up an equipment sale. You’ve got dream kitchens to build! You can’t bother with advertising and marketing to sell used manufacturing equipment. Your expertise is in the sale of custom cabinets and the most beautiful granite countertops available on the market! So how are you going to get rid of all this stuff?
Selling Your Equipment With The Pros
Instead of taking on the task of selling the unneeded equipment by yourself, call in the experts. If your company is taking part in a merger, then you’re likely facing deadlines. You have to be out of one or both buildings by a certain date and you’ll be charged for anything left behind or charged for leaving the buildings in bad condition.
You need a team who specializes in the liquidation of businesses and knows how to turn a profit on your used equipment. You need a trusted company with a strategic marketing plan that can attract the most valuable buyers for your tools and machinery. You need a turnkey solution for selling your inventory and returning your warehouse to its original condition, the “white box” you originally moved your business into.
You need Auction Masters. We are experts in the art of turning a profit for your company’s used equipment. We specialize in working with leases and multiple business owners. We have extensive experience in the many legal issues a business owner may face when leaving a lease. We know exactly how to meet “end of the month” timelines. And we offer turnkey clean-up services. We can help you get your square footage back, if necessary. If your company is taking part in a merger to expand offerings and gain market share, make sure to call Auction Masters. We’ll take care of all your equipment liquidation needs.