Resources
Industrial Auction & Equipment Valuation Glossary: 30+ Terms Defined
Plain-language definitions of the terms banks, trustees, sellers, and buyers encounter in industrial equipment transactions.
3
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.
A
Absolute Auction
An auction with no reserve price: the highest bid wins regardless of amount. Absolute auctions attract more bidders and often produce stronger results than reserved auctions.
AMEA
Association of Machinery & Equipment Appraisers. The leading credentialing body for industrial equipment appraisers. AMEA-certified appraisers have passed rigorous testing on valuation methodology and ethics.
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.
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
Buyer's Premium
A percentage added to the hammer price paid by the buyer. The rate varies by auction and is stated in each sale's terms. For example, a 15% buyer's premium on a $10,000 lot means the buyer pays $11,500 total. The seller receives the hammer price minus the seller's commission.
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.
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.
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. Used for insurance, estate, and 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.
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.
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. The standard valuation benchmark for lenders and most formal appraisals. Assumes adequate marketing and buyer exposure.
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
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.
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 appraisers in the United States. A USPAP-compliant appraisal is required for most formal lending, legal, and tax purposes.
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.