Going Once, Going Twice …

Auction Hunters is an American documentary reality television series that follows Allen Haff, a second generation antiques dealer, and Clinton "Ton" Jones as they participate in storage unit auctions throughout Southern California.

The world of auctions has always intrigued me, so when Roger Meyers alerted me to the coinciding events last week of Liquidity Services buying GoIndustry DoveBid, and Ritchie Bros. purchasing AssetNation I wanted to check it out.

The buyout of Go was the most interesting because I am familiar with its history.

Ross and Kirk Dove started DoveBid in 1999, though they had been in the dog eat dog auction business in the Bay area for many years. They saw the magnificent opportunity to roll up the fragmented business dominated by aggressive but small family businesses in America and Europe. The Doves were charismatic believers and found adventurous dot-com money for their vision of a worldwide online auction business, before the technology had really emerged. The Dove vision and the prospect of going public during the Internet frenzy convinced several auctioneers to join them. The money was good, too – way more than they even dreamed their businesses were worth – and DoveBid grew like topsy. My friend Robert Levy of Norman Levy Associates in Detroit was one of the most important dominoes to fall to the Doves and Robert committed himself to building the business while his brother David was happy to take the big bucks and walk away.

The big payoff of going public never happened as the dot-com boom crashed, but the upfront cash the auctioneers received for joining DoveBid was a windfall by itself.

The brilliant conception of the Dove brothers never really reached fulfillment because the details of running an entrepreneurial auction business did not really fit the needs of the venture capital dudes, who had one thing on their minds – go public and cash your chips. A guy like Robert Levy, who was committed to the business, his clients, and his employees, felt thwarted by the managerial mess in San Francisco. eBay of San Jose had built a professional and highly successful online business and left DoveBid in the dust. The entrepreneurial auction firms who resisted the easy money easily outmaneuvered the cumbersome DoveBid operation on competitive deals.

Where DoveBid made its mark was in developing relationships with big public companies to sell their assets on a commission basis, thus outsourcing a messy job they did not want to do.

GoIndustry, based in London had a similar history to DoveBid’s and eventually managed to go public in England. Unfortunately, the company struggled to make any money, but they had enough capital to pick up a weak DoveBid making a marriage with them in 2008.

The stock of the company did nothing but lose value over the last few years, though GoIndustry DoveBid did a nice job of servicing companies like Delphi, Eaton, Parker, and many pharma clients. They just couldn’t find the formula for making money.

Robert Levy left DoveBid several years ago, but rejoined the fray with the backing of Hilco, an entrepreneurial group in Chicago that has allowed him to reassemble the auctioneering powerhouse he had at Norman Levy with the financial muscle needed to handle big deals. Hilco has done extremely well by servicing the Big Three automotive firms as they shed assets over the last five years.

So now GoDove has been picked up for $31 million (only $9 million cash) by Liquidity Services Inc. in Washington DC. The company has made its mark by selling government assets efficiently. They have a $2 billion market cap, so this deal is pocket change for them. Liquidity started in 1999, but their entrepreneurial challenge was to convince government agencies they could save them aggravation. Obviously it has worked so far.

I am a bit skeptical about their ability to convert GoDove’s private accounts into moneymakers. Perhaps they will try the speculative approach of the agile, smaller entrepreneurial auctioneers, but I doubt a big public firm will have the stomach for it.

Question: On memorial day 2012 should American troops still be in combat in Afghanistan?

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4 thoughts on “Going Once, Going Twice …

  1. Carl Brewer

    NO, but there are consequences in combat troop reduction including issues with Pakistan. Nato is not supporting the overall effort enough to control terrorism nor is the Pakistani goverment. I have my doubts if democracy will ever prevail in either country as long as there is interference from neighboring countries.

     
  2. JACK FROST

    Lloyd: What a question: “In combat”!!! If you mean convenient targets for corrupt, fanatic, disloyal, ungrateful allies: then NO! ABSOLUTELY NOT. We entered Afghanistan in response to the attack on the World Trade Center and the use off U.S. transportation as a weapon of war. A similar attack occurred on 7 December 1941 and it took us 5 years to defeat the strongest conspiracy, the world had ever seen, possessing the finest trained warriors and using the best in war materiel, with a civilian army. I was part of that time as a fighter pilot. I served 23 years in the post war years in two more conflicts. Times had changed. The decision for winning a war transferred from the assigned field commanders to the politicians at the head of government. As a result, on the verge of winning the war in Korea and Vietnam, the politicians quit, surrendered and left the military holding the bag. In less that one month in both Afghanistan and Iraq, the U.S. Forces had defeated the enemy and then the politicians took over. Combat became nation building, and this is where it is now. Badly performed and badly led and more importantly, less than 0ne (1) percent of our population engaged in actively defending our freedoms. We have let this cancer of bad leadership metastasize to a point that we are now experiencing the reverse of the 10th and 11th centuries , in that we are the victims of the new crusades and we have invited the enemy to flourish in our security awaiting for the right time to stab us once more in the back We ought to be ashamed.

     
  3. Robert Levy

    Lloyd,
    I read your articles with interest and I am honored to be referred to as one of your friends as I believe that we share the same moral compass, ethics and values. We have done a lot of business together over many years and you have always provoked creative thought and personal motivation.

    I can’t believe that it has actually been 8 years since I left DoveBid, which was eventually acquired by Go Industry. Time flies when you’re having fun! It was the first time I actually got fired and it was one of the better days of my life. I did not fit their model and they did not fit mine. I did however find a great new home at Hilco where my old successful model was appreciated. Over the past 8 years, Hilco Industrial has swelled to an international firm with domain expertise in numerous industries. Our sales for the last two years alone exceed $1.5 Billion.

    As you so rightly indicated, my main focus was building my business by making the best decisions for my clients, employees, partners and buyers. My frustrations at DoveBid began when the focus was derailed by the new priorities of the VC funded Dot-Com race to a newly defined “Topsy” bottom, out with the care for individual client’s needs and in with the race to gain “Content” for a full website and “Better Wall Street Optics” for a better multiple for the IPO.

    Believe me when I tell you that it was not easy money for the acquired companies. The culture created by the VC funders was contrary to the historical ways of success generated by long term commitment to care for clients, employees, customers, partners and buyers and replaced with “frictionless” high speed to market processes compromising returns and satisfaction. In fact, most of the acquisitions did not receive large up-front cash payments, they allowed themselves to be seduced by the charismatic combination of the brewing internet hype and the Dove’s apparent momentum, and most took a promise of valuable stock when the IPO occurred. Not a single owner or officer of any of the acquired companies remains at the company today.

    As the company’s overhead swelled well beyond income and lost knowledgeable industry veterans, new management developed a different business model where they concentrated on low touch corporate contracts as most corporations have a different set of priorities where maximization of net recovery is not as important as speed. The cash strapped Go-Dove redefined itself as wholesale marketplace where the priority was to sell as much as possible through a low cost online auction venue. They even tried to convince their corporate clients to load their own assets and pay the same commission rates.

    So now, LSI has acquired Go-Dove. My forecast is that as long as large corporate fail to focus on maximization of net recoverable values and maintain satisfaction with a reduced recovery model of low touch online auction processes, LSI will reduce swelled overhead and salary bloat of Go-Dove enough to continue existence to service these clients. The clients who require a more customized approach who appreciate a higher return will gravitate to profitable companies like Hilco who can afford to pay attention to detail.

    The Industrial Auctioneers Association (IAA) asked me to write an article for its newsletter a few years ago. I did so describing the history of the industry and made prognostications as to where our industry would head. The association’s President refused to print the article because he felt that the article put his company in a poor light. By the way, my forecasts were extremely accurate as history now shows.

    Probably not remembered, but David and I sold Levy Latham Global to LSI back in 2001. Levy Latham Global was a company that we co-founded with another partner to handle the sale of military surplus resulting from the garnering of an $8 Billion contract, the largest privatized government contract in history to date.

    RL

     
  4. Alan Hyman

    Lloyd,

    Good info on the Go industry group. I know the Foxs in Baltimore for the last 30 years who became part of it. Michael fox auctioneers. Went to a live auction yesterday which is becoming a rare event, only way you see all your friends from the business anymore?

    Question for you, why the picture of the expert pickers they call themselves auction hunters? What do you think of those guys?

    Alan Hyman
    Hyman Equip.

     

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