The job of a liquidator – in a nutshell – is to pay off all debts of a company, convert all assets into cash, and distribute the remaining balance to the shareholders. Interestingly, this trade is very similar to the procurement of services.
Whilst every liquidation is unique – as far as the company culture, the product portfolio, the relationships with clients and suppliers, or the business landscape are concerned – going in as a liquidator requires the same skills as sourcing a new product or service. In other words: it needs a creative and experienced person to manage this task.
Managing the different interests of the people affected by a liquidation is a truly mammoth task. Inter alia, you’re dealing with employees who are losing their job, suppliers who want to be paid, and shareholders who want to minimise the cost of closing the company. Not to forget your clients who cannot purchase from you anymore. A good liquidator needs both the authority, the seniority, and the sensitivity to do justice to everyone involved.
A very handy skill in both procurement and liquidation is the ability to negotiate. Long-term contracts, for example, need to be dissolved amicably as most of the contracts extend beyond the planned end of the liquidation.
In addition, German labour law mandates a social compensation plan to make up for the hardship associated with losing one’s job.
Converting assets into cash also requires finding a buyer and negotiating a sale. Speed of such a transaction and the final price need to be well balanced to allow for a timely execution of the process: a lower sales price now might be better than a higher one later.
Please note that all negotiations must meet the legal obligation that they can be concluded with debt-discharging effect. Otherwise, the liquidation cannot be finalised.
The fact that the shareholders decided to liquidate a company does not mean that all activities have to be abandoned. It is almost always better to salvage parts or all of the business and sell (or demerge) business units (or the entire enterprise) to someone else. In a service-orientated industry like the simulator centre, I managed to persuade a competitor to take on an entire team of software engineers. Whilst the simulator centre employed only about 60 people, I negotiated agreements with DAX-corporations, SMEs, the public sector, and universities. Investors and/or buyers came from the US, Brasil, France, Spain, Finland, Switzerland, and the Netherlands.
As a liquidator with a procurement background, I also got to purchase several services to help wind down the company. First and foremost, this affects transactional services like notaries, estate agents (property sales), lawyers (contract drafting), and other consultants (eg, to support the transfer of the pension plan to an insurance). In addition, I also had to fill the vacancies caused by people who found a new job before the liquidation was over. This was particularly necessary in IT where the staff was highly sought after.
A liquidation is not without risks. These can manifest itself as critical-path issues (the liquidation cannot be concluded if the company still owns tangible assets), or monetary issues (a buyer leverages its knowledge of your time constraints to lower the price), or in having only one possible buyer for an asset. As any good procurement guy knows, communication and creativity are the “weapons of choice” here.
