Turning Your Aging and Unused Lab Equipment Into Cash
Driven by the need for greater cost effectiveness and the desire to extract the most value from pricey assets, laboratory managers are eager to convert their unused, excess and replaced equipment into cash. Abetted by a challenging economy, various types of laboratory equipment—the undisputed thoroughbreds of the scientific enterprise—are increasingly being redeployed or sold to other users rather than being put out to pasture on schedule, as was the case not so long ago.
By some estimates, sales of secondhand laboratory equipment could well be in the hundreds of millions of dollars annually—with some of the largest increases posted since 2008. Part of the reason is that some, although by no means most, leading companies have created recovery programs to capture the value of unutilized assets, according to Michael Sorensen, senior VP, North American Sales and Solutions, at GoIndustry DoveBid, which works with companies to develop best practices and programs around unused assets, including laboratory equipment. Studies suggest that when such programs are implemented, payback is rapid—around $30 for every dollar invested, according to Sorensen.
There are several reasons organizations should pay close attention to their unutilized assets and how to extract the greatest value from them. Apart from generating cash, this also opens the path to a major social benefit by “redeploying the asset rather than scrapping it, which is the absolute last resort,” says Sorensen.
For many startups and other smaller, technologydriven entities, the ability to source and acquire excess or redundant lab equipment at substantially lower prices may have survival implications—casting a whole new light on the relativity of trash and treasure. To be sure, a number of larger players also participate enthusiastically in this process. Ryan McAuliffe, equipment sales manager at EquipNet, says, “Major pharmaceutical, biotech, chemical, refinery, and food and beverage companies hire EquipNet to assess, evaluate and act as a sales agent for their redundant or excess laboratory equipment.”
Companies like EquipNet and GoIndustry DoveBid are among a handful of others that specialize in asset disposition. Often using different approaches, they have seen their businesses grow substantially during the past decade, with participation from industry, government agencies and academia.
This is still not a crowded area, and the key participants have been successful in differentiating themselves. GenTech Scientific (Arcade, NY), which started in 1995 largely as a GC/MS service provider, has grown into an analytical instrument refurbishment business that now covers a broad spectrum of instrument classes including GC, HPLC, ICP and AA systems, and works with a number of the major lab instrumentation makers. Harlow Scientific (Arlington, MA) also offers a broad range of new demo and refurbished equipment in a variety of classes, as does Pace Analytical (Minneapolis, MN), which has notable strengths in the environmental sector.
Dante Laterra, CEO of American Laboratory Trading, which is emerging as one of the major companies in this field, says, “We are providing opportunities for start ups, smaller companies, colleges and universities and others with budget concerns to get high-quality technical equipment at a discounted price so that they can conduct their research and other projects and compete in their fields on a limited budget.”
American Laboratory Trading, which started operations almost 15 years ago, operates across the U.S. and has global operations. Laterra says that his company works with most of the major OEMs and a number of large companies across several industries globally. “The big company labs are all looking to save money on their equipment too. What we do benefits a lot of different sectors and segments of this business…we help to make sure that useful equipment gets put to its intended use rather than fill up dumpsters somewhere.”
He adds, “We can outfit entire labs because we have one of the largest, if not the largest, inventories in this business. We completely refurbish, recondition and provide warranty and peace of mind.” He says he expects to see the current growth spurt his company is experiencing now continue over the next three to five years. “I am not sure I see any ceiling on it, personally.”
Acknowledging academia as an important market for his company also, McAuliffe says, “More than a third of our laboratory equipment buyers are from universities. These are big buyers without big budgets.” EquipNet provides disposal services to them as well. “In a number of cases, they use their grants to buy equipment for research projects that have short durations, and they use our services to sell the equipment they no longer need,” he says.
EquipNet’s business model does not require that the company take ownership of the equipment. Instead, it acts on behalf of sellers and provides them with a whole gamut of services. EquipNet’s MarketPlace Web venue lets scientists ask questions (which are answered by experienced equipment specialists) and buy lab equipment. The company’s international sales team markets equipment via trade shows, cold calls, blast e-mails and social media networks. It uses its warehouse to facilitate consignment arrangements with customers. “We display customers’ equipment in our warehouse and make the items available to potential buyers who wish to test them. This works well for sellers because the equipment is stored in a clean, safe area, and it frees them up from answering technical questions associated with secondhand transactions,” says McAuliffe.
Equipment acquired from discontinued projects or projects that did not launch becomes available for sale, often unused and in original packaging. McAuliffe continues, “With everyone looking to save now, such unused equipment, which is often documented, makes attractive deals because [items] could sometimes be bought for 50 to 60 percent less than their original price.”
An important part of what GoIndustry DoveBid does is manage such sales, says Randy Small, VP Asset Sales and Services, North America: “We are given lists of assets for sale by clients—biotech, semiconductor, electronic, IT and automotive companies, among others—and we help them to figure out the best sales approaches.”
Essentially, we look at the items being offered, figure out their potential value, and then formulate selling strategies based on the type of equipment involved. Everyday laboratory equipment, such as microscopes or HPLC instruments, for example, is usually included in our exchange sales, which are organized weekly in the form of online auctions.
“We get industry-specific equipment from all our sellers [for] the weekly online auctions. This provides would-be buyers with a continuous supply of equipment,” says Small.
Major laboratory equipment manufacturers are also involved in cradle-to-grave strategies and are developing innovative ways for customers to manage the installed base of equipment, cut costs from both the direct and indirect spend categories, and get more mechanical life out of the equipment. Michael Pope, senior laboratory services consultant at Agilent Technologies, says, “Agilent can help with the whole life cycle from cradle to grave—[from] the acquisition to the disposal of equipment, and all other facets that make up the continuum of support.”
Pope continues, “Agilent has its own pre-owned sales group and sales strategy and does not go out to the secondary market and engage third parties to dispose of equipment.” For Agilent, this approach has started to take shape within the last 12 to 18 months and may have been partly necessitated by market conditions. “There has always been a robust secondary market for used equipment. Today there is a greater sense of legitimacy with the advent of the asset disposition companies, but there has been a secondary market for 15 to 20 years,” says Pope.
To ensure that their customers enjoy the widest possible marketing exposure for their equipment, asset disposition companies use the listing portal known as LabX, which reaches a large spectrum of buyers and sellers. “This gives us access to a broader audience of potential buyers, because LabX has enormous reach,” explains McAuliffe.
Prior to the advent of specialized asset disposition services, large amounts of replaced or redundant lab tools, a variety of both high- and low-end equipment, were sold at live auctions to the highest bidder. Broker-dealers offer another channel for disposition. They generally buy complete lots of equipment at the lowest possible prices, and then resell them at the highest prices the market will bear. “This means that while the labs successfully sell their excess equipment, they often take a substantial loss when compared to the amount of money they could have recouped,” says McAuliffe.
Trained staffers from asset disposition companies go on-site at laboratories and inventory, photograph, assemble and compile equipment specifications. They then try to place the equipment with buyers, either on an individual basis or in lots of similar items. “If the seller has time and the deadline is several months out, we will opt to sell the equipment on our MarketPlace, which uses a bid-ask negotiation method online,” says McAuliffe. “The items are listed individually for viewing by potential buyers, who make offers that are [then] submitted to the sellers for their decision. In general, the higher-priced items are routed to our MarketPlace for negotiated sales. That usually ensures higher [payments] to the seller.
“We usually set dollar level limits for our MarketPlace and for our monthly auction clearance events. That is usually dependent on client sensitivity, how soon the assets need to be removed to make way for replacements, whether the operation is being downsized and the space housing it will no longer be available. All such equipment may be routed to clearance events, which are usually [held for] one or two days online,” says McAuliffe.
A substantial amount of equipment is transferred in this way from major multinational pharmaceutical companies to small biotech and startup entities, explains McAuliffe. “This is a great resource for the smaller players. They are able to buy high-end analytical lab equipment at about one-half or one-third the price of new [items], and it is available immediately with no real lead time. Some lab equipment is highly sophisticated and can take up to a year or more to manufacture.
“We do make recommendations sometimes that the equipment should go to scrap or be donated, or at one of the clearances we will mark it with a low reserve price. In the past, a lot of larger companies had to pay depot companies for the pickup and disposal of equipment they no longer wanted. What we provide for them is a disposition avenue, without any outof- pocket expenses for them for their old and antiquated equipment. We offer a service that enables them to have quick sales within their deadlines, and an opportunity to recoup some funds—in the final analysis, we actually send them money.”
EquipNet also handles the scrapping of discarded equipment for its customers. “We engage contractors who will dismantle and destroy the equipment, and provide the necessary documentation to the seller, indicating that the equipment was properly disposed of. In the case of monitors and central processing units (CPUs), the paperwork will indicate that they were properly destroyed and that the hard drives were shredded to levels that ensure that no proprietary information is accessible,” says McAuliffe.
The seller of the equipment is responsible for ensuring that disposal is performed in accordance with environmental regulations. EquipNet provides guidance and recommends disposal companies the seller could use to properly dispose of potentially hazardous liquids or items that have been in contact with radioactive elements. It also helps clients engage third-party companies that do cleaning and decontamination work and provides the necessary documentation stating that the required standards and guidelines were met during disposition of a particular piece of equipment—either by discarding or by resale. Some types of equipment contain radioactive sources, and this requires going back to the original manufacturer of the equipment (OEM) to power down the equipment.
There are other reasons OEMs remain involved. In a number of cases, proprietary software is embedded in equipment and the licensing agreements covering the software do not transfer to the new owners of the equipment, so the OEMs have to be engaged in the process. “We often get involved with OEMs for secondhand [sales], because they want to be helpful by ensuring that the new customers buy good pieces of their equipment secondhand, in the hope that as the customers get bigger and have more resources, they will buy their new equipment from them. The idea is to plant a seed and create a platform,” says McAuliffe. In addition, this provides an opportunity for the OEMs to retain service and maintenance contracts with the new end users of their equipment. Manufacturers also use asset disposal companies to help them sell demo units and discontinued items.
There is considerable agreement that the aftermarket for laboratory equipment is a growth area. Overall, the secondhand equipment area has become easier to understand and seems more user-friendly now. The comfort level has increased for buyers now that sellers offer warranties and service agreements, often through the asset disposition companies, and there is far less trepidation about buying over the Internet. “There is now greater confidence among both buyers and sellers because of the availability of assistance such as better technical specifications and more accurate pricing,” says McAuliffe.
USED LABORATORY EQUIPMENT DEALERS AND AUCTIONEERS
American Instrument Exchange, Inc. - www.americaninstrument.com
American Laboratory Trading, Inc. - www.americanlaboratorytrading.com
Analytical Instrument Recycle, Inc. - www.airecycle.com
Analytical Instruments, LLC - www.aibltd.com
AST Scientific - www.astscientific.com
Biodirect - www.biodirectUSA.com
BioSurplus - www.biosurplus.com
Block Scientific, Inc. - www.blockscientific.com
Cambridge Scientific Products - www.cambridgescientific.com
Certified Scientific Instruments Inc. - www.certsci.com
Conquer Scientific - www.conquerscientific.com
EquipNet - www.equipnet.com
GenTech Scientific, Inc. - www.GenTechScientific.com
GoIndustry and DoveBid - www.go-dove.com
Harlow Scientific - www.harlowscientific.com
HiTechTrader - www.hitechtrader.com
International Equipment Trading Ltd. - www.ietltd.com
LABEX of MA - www.labexofma.com
LabTrader™ Scientific Equipment - www.labtrader.com
Lehman Scientific, LLC - www.lehmanscientific.com
Mckinley Scientific - www.mckscientific.com
MYCO Instrumentation Source, Inc. - www.myco-instrumentation.com
Pace Analytical Services, Inc. - www.pacelabs.com
Rankin Biomedical Corp. - www.rankinbiomed.com
Scientific Surplus, LLC - www.scientific-surplus.com
SEMTech Solutions - www.SEMTechsolutions.com
SpectraLab Scientific Inc. - www.spectralabsci.com
Tritech Inc. - www.tritechinc.com
Turning Your Aging and Unused Lab Equipment Into Cash
Driven by the need for greater cost effectiveness and the desire to extract the most value from pricey assets, laboratory managers are eager to convert their unused, excess and replaced equipment into cash. Abetted by a challenging economy, various types of laboratory equipment—the undisputed thoroughbreds of the scientific enterprise—are increasingly being redeployed or sold to other users rather than being put out to pasture on schedule, as was the case not so long ago.
By some estimates, sales of secondhand laboratory equipment could well be in the hundreds of millions of dollars annually—with some of the largest increases posted since 2008. Part of the reason is that some, although by no means most, leading companies have created recovery programs to capture the value of unutilized assets, according to Michael Sorensen, senior VP, North American Sales and Solutions, at GoIndustry DoveBid, which works with companies to develop best practices and programs around unused assets, including laboratory equipment. Studies suggest that when such programs are implemented, payback is rapid—around $30 for every dollar invested, according to Sorensen.
There are several reasons organizations should pay close attention to their unutilized assets and how to extract the greatest value from them. Apart from generating cash, this also opens the path to a major social benefit by “redeploying the asset rather than scrapping it, which is the absolute last resort,” says Sorensen.
For many startups and other smaller, technologydriven entities, the ability to source and acquire excess or redundant lab equipment at substantially lower prices may have survival implications—casting a whole new light on the relativity of trash and treasure. To be sure, a number of larger players also participate enthusiastically in this process. Ryan McAuliffe, equipment sales manager at EquipNet, says, “Major pharmaceutical, biotech, chemical, refinery, and food and beverage companies hire EquipNet to assess, evaluate and act as a sales agent for their redundant or excess laboratory equipment.”
Companies like EquipNet and GoIndustry DoveBid are among a handful of others that specialize in asset disposition. Often using different approaches, they have seen their businesses grow substantially during the past decade, with participation from industry, government agencies and academia.
This is still not a crowded area, and the key participants have been successful in differentiating themselves. GenTech Scientific (Arcade, NY), which started in 1995 largely as a GC/MS service provider, has grown into an analytical instrument refurbishment business that now covers a broad spectrum of instrument classes including GC, HPLC, ICP and AA systems, and works with a number of the major lab instrumentation makers. Harlow Scientific (Arlington, MA) also offers a broad range of new demo and refurbished equipment in a variety of classes, as does Pace Analytical (Minneapolis, MN), which has notable strengths in the environmental sector.
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