Ethical conduct and operational integrity have become catchphrases in global business since the international market crash of 2009, but in the highly-competitive auction industry these have always been absolute non-negotiables.
This is according to Joff van Reenen, director of public relations for the SA Institute of Auctioneers (SAIA), who says without these two key elements, longterm stakeholder relationships that are the foundation of the industry in this country could not exist.
“Whether auctioneers are fleet car specialists, deal in art and antiques or specialise in property, the only way the industry as a whole will increase its share of the trading pie and win clients is to consistently deliver better results and superior service.
“If corporates, listed ‘whales’, state-owned enterprises or financial institutions haven’t yet explored auction options to dispose of assets I’d recommend they do, because auctions are sales on steroids. They achieve in minutes what dealers, brokers or tender processes might take months to realise,” says Van Reenen, who is also lead auctioneer for The High Street Auction Co.
“Selling at auction is safe because reserves ensure assets are sold at market value or higher. Then there’s the additional incentive of no commission fees for sellers; buyers are responsible for this cost. My advice to corporates is to shop around, speak to a few relevant auction houses and find one that’s the ‘right fit’. All businesses have unique operational elements and those will ultimately determine which auctioneer best serves your needs.
“If an auction house prioritises service, is upfront in their dealings and achieves the right price, that lays firm groundwork for transforming a once-off encounter into a long-term business relationship.”
SAIA was founded in 1989 to provide a clear set of industry standards that promote the ethical practice of the auctioneering profession. It is the national association for auctioneers and the stakeholders and clients of the auctioneering industry. SAIA members must meet specific legal requirements, be in strict compliance with the Industry Code, the SAIA Code of Conduct and be members of the requisite affiliated associations.
SAIA chair John Cowing, also an industry veteran, agrees that the tenets of superlative service, integrity, innovation and the expertise to consistently meet or surpass sellers’ expectations have the potential to unlock much greater revenue streams in a business sector that already measures annual turnover in the billions. “The fact that the number of complaints submitted to SAIA against accredited auction houses dropped from 78 in 2015, to 49 in 2016, shows that professional auctioneers in SA take their business seriously.”
By far the majority of auction business is derived from the corporate sector and neither corporates, nor financial institutions will conduct business with an auction house that loses its SAIA accreditation. “The effect on a suspended auction house’s bottom line would therefore be dramatic and immediate.”
Van Reenen says the substantial reduction in the number of complaints referred to SAIA year-on-year shows that on the whole auctioneers conduct business ethically and transparently, but it also demonstrates the escalation in public awareness and understanding of the workings of the auction sale process. “Many complaints received have been due to buyers or sellers not having all the necessary information about specific but standard aspects of the auction process, then crying foul afterwards.
“Technology and access to internet research have produced a more educated client base, but auctioneers still bear ultimate responsibility to ensure that every person with whom they conduct business fully understands the process.”
Cowing says a tiny minority of clients will only engage with the industry once, and these are usually private individuals. Across most niche sectors the vast majority of clients are institutions often reshuffle their asset portfolios according to prevailing economic conditions.
Having complete books, records and contracts is high on the list of requirements for state and state-owned enterprises, financial institutions, listed and corporate clients. Auctioneers do due diligence investigations, but on high-value assets the paperwork can be complex and buyers should seek professional advice.
This potentially includes:
- Contracts not signed by all parties or ones that have been amended but without the amendment terms signed.
- Missing or unsigned board minutes or resolutions.
- Missing or unsigned stockholder minutes or resolutions.
- Board or stockholder minutes and resolutions missing referenced exhibits.
- Incomplete or unsigned employee-related documents, such as stock option agreements or invention assignment agreements.
Cowing advises potential clients to check auctioneers’ accreditation status before committing to anything. A complete list of SAIA’s accredited auctioneers can be found at https://www. auctioneering.co.za.