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?