Bad Times Are Good for Auctioneer Who Sells Companies’ Assets

When companies need cash fast, David Handelman is their man.

Handelman runs an auction company in Woodland Hills called American Standard Auctioneers that specializes in business liquidations.

Companies that are going under will hire him to sell all of their assets, “from the front door to the loading dock,” as Handelman puts it. Others might use him to quickly liquidate merchandise that’s gathering dust.

The job takes the 59-year-old auctioneer from coast to coast, staging as many as 16 auctions a year.

Naturally, when the economy is bad, business is good for Handelman. Conversely, when the economy is humming, the auction business slows. Handelman fills in the gaps by doing inventory appraisals for banks and insurance companies.

If you plan to see Handelman at work, a word of warning. Be careful about arching your brow or scratching your nose. This man lives by a simple credo: All sales are final.

Question: What made you decide to become an auctioneer?

Answer: I was in the scrap-metal industry for 25 years, running my own company, and I wanted to get out. I had a friend in the auction business. I saw what he did, and said, “I can do this.” Also, I figured I wouldn’t have to roll barrels anymore and handle a lot of heavy scrap. I enjoy the fact you’re on stage and that everyone wins. The seller wins because he’s able to get his revenue and turn his merchandise quicker, and the public wins because they can get a good deal.

Q: Why would a company need your services?

A: Of course there is the going-out-of-business factor. A lot of times, a business is up against a lease, and they’ve got to get out from under it. Sometimes a business needs to get rid of discontinued merchandise--items that are just sitting there, not returning any revenue. Business is like anything else. Whether you’re doing great or not doing so great, you need cash flow. The fastest way to get cash is through an auction.

Q: Why wouldn’t a company just move the merchandise itself?

A: Expertise in marketing. We have access to markets they don’t. And by having an auction, there’s a much larger attraction. Also, it’s much faster. We can sell an entire warehouse in one day. I’ve moved 200 lots in an hour before, and that’s an awful lot. An auction also eliminates liability for the company because we sell everything as is, with all the faults. There’s no warranty or guarantee.

Q: What do the clients get when they hire you?

A: We go in and do everything for them. We do the marketing, the lotting, tagging, cleaning, cataloging. We do the actual sale, and we handle the checkout. We offer a full service to the clients.

Q: How are you paid?

A: I’m paid by commission, as a rule. There’s no set fee. It could be anywhere from 3% to 50 [percent] depending on what it is. As an example, the auctioneer who sold a hotel in Las Vegas recently was on a 5% commission, but of course it was a $4-million sale.

Q: How do you find the right buyers?

A: Let’s take widgets. We would [notify] all the widget manufacturers, distributors, dealers around the country, and that’s our target. Typically we would order a mailing list of people in that arena, people who handle those particular items. In addition we use our own contacts. That includes our own database of buyers.

Q: What kind of stuff do you sell?

A: Just about anything you could think of. Fire hose, lab equipment, headsets, computers, janitorial supplies, and the little electric carts people use to drive around the facilities. We do all of that. We will sell everything from the front door to the loading dock. Anything a person’s eyes can see.

Q: What are the most unusual items you’ve sold?

A: We’ve sold boats, real estate, you name it. We get calls all the time from people saying they want to sell this or that. I had a call this morning from someone who has a dog vitamin that they’re discontinuing. It’s 4,000 pieces.

Q: What was your biggest auction?

A: I did one that took in about $1 million. It was a furniture company, and the principals in this particular company had absconded with some of the money, so the investors brought it down through litigation. The company had branches all over the country--three stores in Florida, two warehouses here in L. A. It was a good sale.

Q: Ever start the bidding and have people just stare blankly at you?

A: Oh sure. It’s dead air. They look at you like, “What’s he talking about?” If people don’t bid, it can be a bit nerve-racking, but that’s what makes a good auctioneer. I’ll usually take one item, say lot 101, and combine that with lot 102, and if they don’t bid on lot 102, then we’ll combine that with lot 103. What a good auctioneer does is usually mix the good and the bad together. The idea is to make sure all the items are sold.

Q: Did you ever have winning bidders later refuse to pay?

A: Yes. But we collect a refundable deposit that’s used against the purchase. If they don’t pay, not only do they forfeit their deposit, but also there can be legal action. When they sign a bidder’s paddle, they’re signing a binding legal contract that obligates them to pay. Most auctioneers [audio] tape-record their sales, and the tape recording does hold up in court. The auctioneer, as an agent of the seller, goes after people who refuse to pay. I’ve been to court, and I’ve ended up winning.

Q: How is your business affected by the economy’s ups and downs?

A: Of course, business is best in a recession. You’ll see an awful lot of sales. Companies are downsizing. Companies are merging. People are very tight for money, and the fastest way to get it is during the auction process. But even if the economy is bustling, people are still manufacturing. They still have items on the shelf that they have to get rid of. So there are always opportunities for an auctioneer.

Q: Do your clients have realistic expectations about what their items are worth?

A: Sometimes. Other times they equate everything to their costs, and that doesn’t happen in the real world. You have to realize you’re going to get anywhere from 10 to 25 to sometimes 50 percent of value. The auctioneer is already on commission, so he has a vested interest in getting as much money as he possibly can.

Q: How much hand holding goes on with the client, then?

A: Sometimes a lot. People become very emotionally involved, and this is something an auctioneer has to deal with. You have to work with them by telling them this is what happens in the real world, and that there are a lot of good points to it, that they’re getting money. Cash in hand is better than merchandise sitting on a shelf, and it allows them to move on.

Q: What are the pitfalls of your job?

A: You always have disgruntled sellers and things like that. Sometimes you have buyer’s remorse--”Oh gee, I shouldn’t have bought that.” Well, it’s too late. The auctioneer can’t go back to [other bidders] and resell an item. Once a sale is made, that’s it.