Traditionally, the auction business has been dominated by one-man shows and family firms.
Rael Levitt, founder and CEO of the Alliance Group, says he did not have that scenario in mind when he started an auction company 16 years ago. “The auction business is dynamic and exciting and I believed firmly in the power of auctioneering as a method of sale.”
Levitt’s vision went beyond the customary idea of a client needing to auction off property and assets during hard times only. “Auctioneering had a poor reputation. We were called the undertakers of the business world. I wanted to take the industry – with its negative perceptions in the mind of the public – and make it the first-choice method of purchasing and selling for the public.”
He concedes the negative perceptions were somewhat justified, especially in the 1980s and 1990s, when bankruptcies were the order of the day and auction companies were seen to be picking up the pieces. “This climate arose because of the country’s political instability, which caused interest rates and the rand to fluctuate, and because there was less support of defaulting debtors from banks.”
Levitt says the culture change brought about after democracy means there is more support for business. One would think this would put auction companies out of business but the industry has grown exponentially. Auction Alliance last year made turnover of R2,3bn and counts among its clients Old Mutual, Sanlam and De Beers. Government is also a supporter of auctions, he says, with many munici-palities choosing this method to sell off properties and large equipment. The company has also conducted auctions for the asset forfeiture unit.
Levitt got into the business while still a law student, at the age of 21 and became hooked. He later launched a company called Levco, which became Auction Alliance. “I saw the potential for reinventing, renewing and re-energising the industry. My vision was to create a corporate culture around auctioneering, to develop a national player and encourage the public to use it as a preferred method of sale.”
The industry is burgeoning in Australia, the UK and the US, and Levitt travelled the world to find out how they do it internationally. “I imported the multiple auction method we use from Sydney and London. In the old days in SA you would have the sheriff standing on the courthouse steps, selling off repossessed houses. In Australia they were holding upmarket, professional auctions in smart hotels. They would sell off 10 to 100 properties at one sale.”
The style was to make the event much more friendly to the consumer – a principle which Auction Alliance firmly adheres to. “We make it a welcoming event instead of a scary event that people attend with trepidation. We emphasise a friendly, inclusive style.”
This policy is certainly borne out at the company’s Johannesburg offices, where a young and enthusiastic team clearly enjoy the buzz of being involved in a stimulating and ever-changing business. The upmarket offices, acquired last year, reaffirm the corporate identity Levitt and his team have taken care to create and cultivate – its open-plan design reflecting the emphasis on openness and transparency, teamwork and egalitarianism.
He has also taken care to locate the offices in up-and-coming areas in the major centres: Melrose in Johannesburg, De Waterkant in Cape Town and La Lucia Ridge in Durban. This is another departure from the perception of auctioneers being based in draughty warehouses on the outskirts of town.
Auction Alliance’s events are held in a comfortable annex, with the latest web- cast technology enabling customers in other centres to participate.
Auction Alliance has grown into the largest auction company in SA in terms of value as well as volume, says Levitt. “Last year the company conducted 1 500 auctions. It is among the largest auction companies in the world dealing in property and equipment.”
Levitt began to grow the concern as a national brand in 2001, and has opened 10 offices in SA during the past five years.
Gary Locketz newly appointed group CFO
The team stands at 200 and a branch was opened In Dubai last October. “It is the first property auctioneer there. Auction companies from all over the world fly into Dubai to conduct multibillion-dollar auctions and then fly out. There was no local presence.”
The group plans to expand in the Middle East, with auctions being scheduled in other Gulf states.
Levitt has never underestimated the value of marketing, and the company spends over R30m/year on advertising. “We built on and increased dedicated auction sections in the newspapers and we are continuously growing our huge buyer and seller database and building customer relations to make our services more available to the public.”
The continual search for new opportunities to service clients is part of the Alliance Group’s winning formula. “Our mission is to give the client full exposure to our asset sales and services; we favour an integrated approach to the client.”
To this end, the company stripped out the valuation side of its service offering and acquired NBW Crosher & James’s valuation arm. Valuation Alliance is the first of a new batch of services to come on line this year. These include business broking, online auctions and a more comprehensive property inspection service. The latter service, new in SA, helps consumers make more informed decisions when buying property.
Part of the team to drive that process is newly arrived CFO Gary Locketz. He will be focussing on the financial aspect of the new business units.
There is a skills shortage in valuations and the company has launched an initiative to recruit and train people in this skilled profession. To bolster its online offering, it has acquired the Middle East & Africa licence for DoveBid Inc, an on-line business-to-business capital asset auctioneer based in the US.
Levitt’s corporate identity vision came to fruition when the Alliance team complement reached 100. Each member was invited to consult on what would become Alliance’s core values and mission statement. “We wanted a young, dynamic and innovative corporate culture,” says Levitt.
The core values are: “We exist for our clients; we have a passionate, can-do attitude; we win by working as a team; we are resolute in our honesty and integrity; we relentlessly get better; and we do what’s best for our business.”
One spin-off of the group’s success is that it attracts talented people in various sectors, says Levitt. For example, its specialist commercial property sales and valuation teams consist of people with strong commercial property knowledge. The same goes for specialists in residential property, agricultural, mining and industrial assets. “Many of our team members have university degrees and we go on to campuses to recruit talent. Our aim is to become an employer of choice.”
Only 10 of the team of 200 actually work as full-time auctioneers and “shout numbers”, says Levitt.
The company has also extended a helping hand to Tsojana, an impoverished Eastern Cape village and birthplace of chairman Sango Ntsaluba. The project is part of a BEE initiative it launched last year, Project Abee.