Duncan Ainscough of Gordon Brothers joins David to discuss auction results in the audio-visual equipment industry. #BlackbirdTV
About this segment of Blackbird TV
Recorded: December 7, 2020
Published: March 2, 2021
Joining me today is Duncan Ainscough, the managing director for commercial and industrial assets in Europe and he’s based in the UK. How are you today, Duncan, this afternoon, I’m never good at this this big seven hours five hours, I just can’t do them. I’m doing very well, David, thanks for having me. I’m looking forward to to our little chat. Hey, you shared some information with me that you put together about the audio visual sector, and this is in the COVID section so let’s let’s talk about what’s happening because I find the opposite of what you would anticipate happening relative to these asset classes, so what’s your perception on what’s happening in the industry right now audio visual wise? Well, I’ve talked a lot you, and I have talked on the IAA, we talk about asset values it’s a key hot topic for everybody, everyone’s trying to buy at the right price and also value at the right price, obviously, and I think we’re seeing some strange anomalies. We’ve got sectors like bus and coach, which essentially have disappeared because well, no the bus hasn’t, but the coach market as we call it has disappeared. Because no one’s taking tours no they’re not taking old people on tours around the cities of Europe and things. All those coaches are sitting and they’re sitting there not doing anything. I know banks have got 180 of them parked up in in the UK. It’s probably more, but that’s just one case, I know there’s similar numbers probably into the high hundreds in Spain as well. So that markets essentially disappeared, but the real data source I want to talk to you about really is the audio visual market, because we’ve actually had some real real live events and big events in that space over the last month or so, and the audio visual market obviously took a real, in terms of the UK market I’m talking here, it’s in turmoil these companies hired out equipment for events, concerts, sporting events, conferences… And it’s all cancelled. It’s all virtual yeah it’s all cancelled, and you know their income dried up, that’s it, you know and they could take loans, but loans needed paying back. They probably have loans to begin with. Well funnily enough yeah a couple of cases, are we worked on, yes there was banks involved, but there’s always banks involved you know companies need that the support you know, lead liquidity. So it’s interesting that this sector where we took a look at and we did our valuation, when insolvency comes in the first thing you do for the administrator is to do a valuation, and we looked at some of the numbers and we got quite nervous I have to say about reporting numbers. Because if you report a number to administrator you’ve got to achieve that, you know, you can’t get that that wrong. And we had a situation where in one of the cases on the audio visual side that the directors wanted to buy the business back, do a pre-pack, effectively, and made an offer for the assets shall we say. We took a look at it and thought, “no that’s that’s not enough,” but this bearing in mind this was you know, in COVID just after lockdown. We hadn’t had any news about vaccine or anything so this was really at the peak of what’s going to happen, and Gordon Brothers being entrepreneurial and not minding risk, we said, “okay, no we don’t think that’s a good enough offer. We’re going to underwrite this for you.” So we actually did a guarantee to an administrator. Which is quite unusual in the UK they don’t they don’t normally do that, but they had this offer, they were unsure about whether to take it so we said, “no no, we’ll we’ll guarantee the realization, and we’ll guarantee all the costs as well.” That was one sale in the meantime we’d also been instructed on another sale when I and I’m not going to give you the exact numbers here, David, but let’s say one’s you know they’re in the millions, in terms of realization so you know it’s not… They’re big deals! They’re big deals, I think we ended up selling about six and a half thousand lots of A/V equipment in a six week period, and they went absolute gangbusters. You could not believe the amount of interest we had in these sales. So let me just feed this back, here we are we’re in turmoil, there’s absolutely zero demand for this equipment because the entire industry is decimated, nobody’s having a concert, nobody’s doing anything, all the theaters are closed, all the leasing companies that job this stuff out are all really really hurting. You sell six thousand lots into this industry… yeah …and it kicks butt. It went, one sale was double estimate, and the other sale, I have to say almost embarrassingly was three and a half times what we thought it was worth. Now we had in one sale 1700 bidders. 1700 bidders. I’ve got a stat here and and your 2020 average for that type of a sale was 223 buyers. And then and then your November 2020 stats are 1787 bidders. Sorry David to cut across you, but in the best way in the world, you’d say on a really good day five or six hundred bidders would be a fantastic attendance at an auction sale. I agree that’s an extraordinary an extraordinary number. Yeah so. We’re getting similar results in the United States with regard to participation, and values continue to remain strong in sectors that don’t make sense, and it’s very difficult to point and put a finger on it, because it’s seemingly in every industry, right? Some are obviously bad, I mean you haven’t sold a motor coach, right? So I would I would think that might be a little different, plus those are really expensive assets, you’re talking about hundreds of thousands of dollars for a coach, where you’re talking about a couple three thousand dollars for a sound board I’m making these numbers up. Let me give you some context of that though so the numbers are and it’s important it’s a very valid point, David, is that you know a coach which would be worth 160, 170,000 pounds let’s talk pounds they had 168 of them I think, they sold two or three at about a hundred thousand, and then the rest now they’re just holding. They’re just gonna hold because there’s no other buyers out there for them. Now where they found those buyers for two or three I don’t know, but that gives you an idea, yes you are talking difference a sound ex, and a coach, we’re talking different assets but but you know still some of this equipment was very high, I think the highest value lot was over a hundred thousand pounds for a single lot, so it wasn’t just it wasn’t just the old lamp and and mic, it was it was everything a whole the whole gamut of audio visual. Wow! Fascinating fascinating numbers. Sorry David I just cut across you, I’m sure you can edit me out if I’m if I’m gabbling too much. The other interesting thing is and it’s something that we do measure here is sell-through, so 99% of it sold and 99% of it got paid for. That’s fabulous, those are huge numbers, and to those in the auction industry that are watching this, we all love when a sale happens like that, and everybody’s paying, so that’s great. Duncan, thanks for joining me today. No problem. Cheers. Bye.