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Industrial Auction & Equipment Valuation Glossary: 39 Terms Defined
Plain-language definitions of the terms banks, trustees, sellers, and buyers encounter in industrial equipment transactions.
A
Absolute Auction
An auction with no reserve price: the highest bid wins regardless of amount.
AMEA
Association of Machinery & Equipment Appraisers, a nonprofit professional association for machinery and equipment appraisers, founded in 1983 by the Machinery Dealers National Association (MDNA). AMEA awards the Certified Equipment Appraiser (CEA) designation to individual appraisers, not to firms, and requires its members to adhere to USPAP. KD Auctions' parent company, KD Machinery, holds the AMEA company membership.
Article 9 Sale
A sale of collateral by a secured creditor under Article 9 of the Uniform Commercial Code (UCC). Common when a borrower defaults and the lender exercises its right to sell the pledged equipment.
Asset Disposition
Asset disposition is the planned process of taking business assets a company no longer needs, such as machinery, tooling, and vehicles, out of service and converting them to value through reuse elsewhere, sale, donation, or recycling. It covers routine sales of surplus equipment by a healthy company as well as forced sales in a liquidation: every liquidation is a disposition, but not every disposition is a liquidation. The method, whether a cash purchase, a private treaty sale, or a managed auction, follows the seller's timeline and goals.
Assignment for the Benefit of Creditors (ABC)
An assignment for the benefit of creditors (ABC) is a voluntary, state-law liquidation process in which a company in financial distress (the assignor) transfers all of its assets to a fiduciary (the assignee), who sells them and distributes the proceeds to the company's creditors. It is often viewed as a cheaper and more flexible alternative to federal bankruptcy, and because the debtor starts it, it differs from a creditor-initiated receivership. The rules vary widely by state: some states govern ABCs by statute and others mainly by common law, some require court supervision and others involve little or none, and in 2025 the Uniform Law Commission approved the Uniform Assignment for Benefit of Creditors Act and recommended it for enactment in every state.
Auction Catalog
A detailed listing of all lots available in an auction, including descriptions, photos, condition notes, and serial numbers. A professional catalog drives buyer confidence and higher bids.
Auto-Extend
A bidding feature that automatically extends the auction closing time when a bid is placed in the final minutes, preventing "sniping" and encouraging competitive bidding to drive final prices higher.
B
C
Cash Purchase
A direct purchase of equipment by the auctioneer or dealer at a negotiated price: no auction, no timeline. Provides sellers with certainty but typically at a discount to full market value.
Certified Equipment Appraiser (CEA)
A Certified Equipment Appraiser (CEA) is a professional designation the Association of Machinery and Equipment Appraisers (AMEA) awards to individual appraisers, not to firms. AMEA says CEAs have at least five years' experience in the machinery and equipment marketplace and have passed its testing, and to keep the designation they complete 70 hours of continuing education every five years and have an appraisal reviewed by AMEA's Appraisal Review Committee every four years. KD's appraisals are prepared by our AMEA Certified Equipment Appraisers, Tim Pfister, CEA, and Peter Lenstrohm, CEA.
Commission
A percentage of the hammer price paid by the seller to the auctioneer, agreed in the consignment contract. The rate is tailored to each engagement based on equipment type, value, and sale structure.
Consignment
The placement of seller-owned equipment into an auction run by an auctioneer. The auctioneer markets and sells the equipment on behalf of the seller for a commission on the proceeds.
Credit Bid
A credit bid is a bid in which a secured creditor offers to buy its own collateral by offsetting the debt it is owed instead of paying cash. In a bankruptcy sale under Section 363, 11 U.S.C. 363(k) lets the holder of an allowed secured claim bid this way unless the court, for cause, orders otherwise. As the U.S. Supreme Court noted in RadLAX Gateway Hotel v. Amalgamated Bank (2012), the ability to credit-bid helps protect a creditor against the risk that its collateral will be sold at a depressed price.
D
Decommissioning
Decommissioning is the process of permanently taking equipment or a facility out of service: shutting it down, isolating and disconnecting its energy sources, and making it safe to remove, sell, or scrap. For industrial machinery that can mean electrical, mechanical, hydraulic, pneumatic, chemical, and thermal energy, all of which should be controlled before anyone rigs or moves a machine. OSHA has said that an electrician locking out a disconnect and removing the power cables from a machine being taken out of a plant is work covered by its electrical lockout and tagging rule, 29 CFR 1910.333(b)(2).
Desktop Appraisal
A desktop appraisal is an equipment valuation an appraiser develops without personally inspecting the assets, relying instead on photographs, make, model, and serial numbers, and condition notes supplied by the client or another party. Its reliability depends on how accurate and complete that information is, and it is often used for preliminary values, for example when a lender wants a collateral estimate before committing to a full onsite appraisal. AMEA's standards require the appraiser's certification to state whether a personal inspection was made, so a desktop report discloses that the equipment was not inspected.
F
Fair Market Value (FMV)
The price at which equipment would change hands between a willing buyer and willing seller, both with reasonable knowledge, neither under compulsion. Often used for estate, tax, and other non-distressed valuations.
Forced Liquidation Value (FLV)
The estimated amount equipment would sell for at a forced, immediate sale, typically at auction with a compressed timeline and limited marketing. Lower than OLV. Used in bankruptcy and foreclosure contexts.
G
Going Concern Value
The value of a business or facility assuming it continues to operate, as opposed to liquidation value. Going concern value is typically higher than liquidation value and is relevant when buyers might purchase a facility as a running operation.
H
Hammer Price
The final bid price at which a lot sells at auction, the price "hammered" by the auctioneer. The hammer price is what the seller's commission is calculated on. The buyer pays hammer price plus buyer's premium.
I
Investment Recovery
Investment recovery is the corporate practice of recovering value from surplus, idle, or obsolete assets instead of letting them sit unused. An investment recovery program decides whether a machine is moved to another plant, reconditioned, sold through an auction or private sale, or recycled. The Investment Recovery Association, a trade association for investment recovery professionals, sums up the options as redeploy, recondition, return, resell, reclaim, and recycle.
L
Liquidation Value
The estimated amount equipment would sell for at a forced or time-constrained sale. See also: Orderly Liquidation Value (OLV) and Forced Liquidation Value (FLV).
Lot
A single item or group of items offered as one unit in an auction. Each lot has its own catalog number, description, and bidding.
M
MDNA
Machinery Dealers National Association. A trade association for industrial machinery dealers and auctioneers. MDNA membership indicates professional standards in the machinery industry.
N
Net Minimum Guarantee
A guaranteed minimum amount the seller will receive from an auction, regardless of final hammer prices. The auctioneer bears the risk if proceeds fall below the guarantee.
Net Orderly Liquidation Value (NOLV)
Net Orderly Liquidation Value (NOLV) is the orderly liquidation value of assets less the estimated costs of carrying out that liquidation, such as marshalling, reconditioning, carrying, and selling expenses. It estimates the net cash a business could expect if its assets were sold in an orderly way over a reasonable period. The OCC's Comptroller's Handbook on asset-based lending says the appraisals these lenders rely on should provide NOLV, not cost or retail value, as the standard for collateral valuation, and that NOLV should be established by a competent party independent of the credit transaction.
O
Online Timed Auction
An auction conducted entirely online with a set closing date and time. Bidders compete via the internet, with auto-extend protecting against last-second sniping. The dominant format for industrial equipment auctions.
Orderly Liquidation Value (OLV)
The estimated amount equipment would sell for at a properly marketed, reasonable-time auction. Higher than FLV. Commonly requested by lenders. Assumes adequate marketing and buyer exposure.
P
Private Treaty Sale
A private treaty sale is a sale at a price negotiated directly between one seller and one buyer, rather than set by competitive bidding at an auction. In industrial equipment it may be an outright cash purchase by an auction house or dealer, a deal an auction house or broker negotiates with a buyer it already knows, or an agreement made directly between two companies. It can close quickly and confidentially, but with fewer parties seeing the asset, the price comes from negotiation, comparable sales, and appraisal rather than live competing bids.
R
Receivership
A court-ordered process where a receiver is appointed to manage and liquidate a company's assets. Similar to bankruptcy but often used in state court proceedings and secured creditor enforcement actions.
Reserve Price
A minimum price set by the seller below which the auctioneer will not sell. Reserve auctions protect sellers from selling at distress prices but may reduce bidder participation vs. absolute auctions.
S
Section 363 Sale
A bankruptcy court-supervised sale of assets under Section 363 of the U.S. Bankruptcy Code. 363 sales allow bankruptcy trustees to sell assets free and clear of liens, providing buyers with clean title.
Secured Creditor
A lender whose loan is backed by collateral: equipment, real estate, or other assets. In a default, a secured creditor has the right to recover the collateral and sell it to satisfy the debt.
Settlement
The final accounting and payment at the end of an auction engagement. The seller receives a settlement statement showing all lots sold, hammer prices, commissions, and net proceeds.
Simulcast Auction
An auction conducted simultaneously onsite (with live bidders in the room) and online (with remote bidders via the internet). Combines the energy of a live auction with the reach of an online platform.
Stalking Horse Bid
A stalking horse bid is an initial offer for a debtor's assets, set out in an asset purchase agreement negotiated before the auction, that sets the floor other bidders must beat. It is most common in Section 363 bankruptcy sales, where the court's bid procedures order approves the arrangement and the stalking horse bidder typically receives bid protections, such as a break-up fee and reimbursement of reasonable expenses if it is outbid. The arrangement protects the debtor from an auction that draws only unreasonably low bids while still letting competing bidders top the price.
T
Trustee
In bankruptcy, a court-appointed trustee manages and liquidates the debtor's assets for the benefit of creditors. Industrial auctioneers work closely with bankruptcy trustees on Chapter 7 and Chapter 11 liquidations.
U
UCC
Uniform Commercial Code. The body of law governing commercial transactions in the United States, including secured transactions (Article 9) and the rights of secured creditors to sell collateral.
USPAP
Uniform Standards of Professional Appraisal Practice, the national standard for how appraisals are developed and reported in the United States, maintained by the Appraisal Standards Board of The Appraisal Foundation. USPAP is a standard, not a credential. Lenders, courts, and government agencies often require USPAP-compliant appraisals.
W
Webcast Auction
An auction broadcast live via video stream, allowing remote bidders to participate in real-time alongside onsite bidders. Common for high-value equipment where buyers want to see machines demonstrated.
The Power of Two
KD offers both auction and direct purchase channels. If you need equipment now, without waiting for an auction, KD Machinery has dealer inventory available today.