AssetNation featured in the Houston Chronicle
12/5/2008
Deal is part of makeover for online auction house
When Asset Nation announces the planned acquisition of rival Asset Auctions today, it will complete a three-part makeover for the Houston-based online auction house that bills itself as an “industrial eBay.”
Two weeks ago, in efforts to broaden its appeal, the company changed its name from Salvage Sale and redesigned its Web sites, including SalvageSale.com and CapitalAssetSale.com, CEO Dan Parsley said. With the purchase of Asset Auctions, the company picks up new territory in Mexico and expands its sales opportunities to liquidated and government-owned equipment.
Terms of the deal for Warrendale, Pa.-based Asset Auctions were not released, but Parsley said his company’s first acquisition would nearly double revenue to more than $100 million. The purchase was funded by corporate parent and private equity firm Spire Capital and did not require outside financing, Parsley said.
“If we were out there trying to raise new capital from scratch, that probably would have been a different story,” he said.
Opportunity beckons
While credit has been a challenge for some in the ongoing recession, Parsley said the acquisition of Asset Auctions, which specializes in helping companies liquidate assets, will help Asset Nation capitalize on increased bankruptcies in a down economy. More bankruptcies likely mean more liquidation of industrial assets, said Jamie Sullivan, an industry analyst at RBC Capital Markets.
“We frankly expect to see — we’re already seeing — a spike in activity,” Parsley said. “If the economy is generally slow, they’re going to free up some idle assets to raise some cash.”
It’s a good time to be in the auction business, said Bob Armstrong, COO of Richie Bros. Auctioneers, the country’s largest publicly traded auction company with $3.6 billion in sales projected for 2008.
“The economy right now is certainly playing a role in that,” he said.
Asset Nation traditionally specialized in auctioning salvaged or end-of-life equipment. Asset Auctions focused more on company liquidations and government auctions, different niches that Parsley said make the firms natural complements.
While online industrial auctions are still in their infancy, they are giving sellers another avenue. Traditional wholesale selling can mean getting less money, and private auctions mean added expense of moving equipment, said Kelly Williams, CEO of Asset Nation customer Adobe Equipment, a Houston Caterpillar dealer. He said he gets about 10 percent more money by selling through the online auction.
“That’s the beauty of the Internet,” he said.
Watching online sales
Richie Bros. is also watching Internet sales carefully. The company allows online bidding into the live auction, and about 30 percent of its customers and $600 million in sales come over the Web, Armstrong said.
“It’s growing all by itself,” he said. However, he noted that most bidders still like to inspect equipment in person first.
Link: Link to Houston Chronicle Article
