Inventory liquidators and auction firms pick at the bones of failed dot-coms and get rich in the proc-ess. What's wrong with that?
When Overstock.com CEO Patrick Byrne learned that online jewelry retailer Miadora.com was closing last fall, he flew to San Mateo, California, and handed his business card to Richard Caniglia, vice president of operations. On the back were three little words that captured the embattled Caniglia's eye: "I have cash."

Within days, Caniglia agreed to sell Byrne inventory worth $12 million at retail prices, goods for which Miadora had paid $5.5 million wholesale. Byrne's price? $2.5 million. His plan? To sell it on his Overstock.com Web site for less than wholesale price, as he's done with everything from baby items and sports gear to ISP and phone service, some of which were picked up from defunct companies.

Such are the lives of inventory liquidators and the companies they're buying from these days. Byrne and his ilk have found the pickings almost obese with opportunity over the last several months as once high-flying e-commerce companies fell to their deaths, and the online-retailer liquidation business is likely to get even better through year's end, analysts say.

The business press has long used the metaphor of the vulture to describe companies like Overstock.com, but Caniglia doesn't view Byrne with the distaste humans usually assign to carrion-eaters. "He's a benefit to the creditors," he says. "He gave a very fair price to the creditors of Miadora and helped bring some of the debt down and was very businesslike about it."

There's no doubt that successful inventory liquidators like Byrne are opportunists who recognize signs of weakness in companies early enough to step in and cut a deal (some might say to take advantage). Their ability to think on their feet and act quickly are key, as is a gut instinct for recognizing value. The real players in liquidation attract a grudging admiration from other business people, despite their habit of circling the dying.