Present Value Blog » Machinery & Equipment Appraisal

Did Someone Call the Health Inspector?

admin — Tue, 15 Jun 2010 22:38:48 +0000

Yesterday, an article appeared in The San Diego Union Tribune titled “County Issues Alert on Health Inspector Scam” about a scam happening in San Diego, the home city of Present Value’s west coast offices. Apparently, a phony health inspector has been calling area restaurants and, claiming that there are new procedures for arranging a health inspection, obtains personal information from the business owner. The scammer then uses that information to set up fake accounts on online auction sites. The health department wants to remind restaurant owners that health inspections are always unscheduled, and they will never provide restaurants with advance notice of their visits.

But the scam could have a ripple effect, because what happens to the people who participate in an auction conducted by a fake seller? It’s so important that buyers who choose to make purchases through auctions make sure they know that they’re working with a reputable auction house and a legitimate seller.

For several years, Present Value has been involved in the auction industry. The company can help a seller by performing an inventory inspection, conducting a machinery or equipment appraisal, and putting the seller in touch with a reputable auction house, which protects both the seller and potential buyers.

By: Present Value

Additional reading:

Inventory Control Services

The Importance of an Unbiased Third-Party Opinion

Machinery and Equipment Auctions

Glimmers of Hope in Small-Business Lending

admin — Tue, 18 May 2010 22:18:36 +0000

After more than two years of stagnation, it appears that small-business lending is on the rise. The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing, increased 4% in March 2010, the first year-on-year gain since October 2007.

A recent Time Magazine article reported that many small and community banks are now seeing more demand for loans, which is a positive sign for the economy. According to the article, economists have expressed concern that despite the 3.2% first quarter economic activity growth, there was a lack of business lending activity. Business lending demonstrates business growth, they argue. Businesses in growth mode need financing to purchase equipment and hire staff, and without that there can’t be sustained economic recovery.

As we have discussed in previous posts, banks are lending money, but they are being more cautious about their investments. This means they are conducting more careful due diligence, which includes their own certified equipment appraisals and business valuations to ensure that they will recoup their losses should a loan default. Having a defensible, impartial appraisal in hand can help increase the chances of getting much-needed money for a small business.

By: Present Value

Additional Reading

5 Cs of Lending (How Appraisal Fits in Even Though It Doesn’t Start with C)

Got a Startup? Get a Business Valuation

Present Value: More than an Appraisal Firm

Machinery and Equipment Auctions

admin — Fri, 14 May 2010 02:12:04 +0000

Earlier this month, a major industrial auctioneer sold more than 3,600 heavy equipment pieces at a two-day auction held in Texas, proving that there is a strong demand for heavy machinery and equipment. Nearly 3,000 people from 41 different countries bid in person or registered to bid for items online during the event. Online bidders were big purchasers and took home 23% of the equipment that was for sale. Read about the auction in this article titled, “Demand for Heavy Equipment Remains Strong.”

We’ve written many times in the past about online and in-person auctions, the reasons to conduct an auction, the steps to take to prepare for one, the different types of values given to items up for auction, and Present Value’s ability to offer the service. Given this recent proof that demand for auctioned equipment is high, we decided to revisit the subject.

When a business fails or is asked to leave a property, often the business owner will decide to hold an auction with the goal of quickly selling equipment for as high a profit as possible. Present Value can represent companies in these situations through the whole transaction. Our appraisers will provide companies with the three values of the equipment – liquidation, forced liquidation, and fair market – and facilitate the auction process, which will be conducted by one of the two auction houses with which we partner.

By: Present Value

5 Cs of Lending (How Appraisal Fits in Even Though It Doesn’t Start with C)

admin — Tue, 27 Apr 2010 22:36:35 +0000

Although this title may sound a little strange since appraisal doesn’t start with the letter c, most would-be borrowers probably don’t realize the role an appraisal can play in the eyes of lenders. The well-known 5 Cs of Lending consist of:

Character – Evaluation of the business’ financial performance, credit report, management, and payment trends; trustworthiness
Capital/Capitalization – Financial position of the business, including resources, fixed assets, net worth, and the owner’s equity
Capacity/Cash Flow – Funds available to repay the loan, which takes into account whether or not the borrower can continue to pay for all other business expenses, personal needs, etc.; debt ration
Collateral – Assets that can be used as security should the loan default (For this post, we are going to go into a little more detail about Collateral.)
Conditions – External market factors, like competition and market trends

The good thing to note is that even in today’s tight economic environment, lenders backed by the SBA are lending money; however, because of this environment, lenders are increasingly more cautious. This means they are conducting more careful due diligence, which includes their own certified appraisals of collateral to ensure that they will recoup their losses should a loan default.

Having all the Cs in a row – including having a defensible, impartial asset appraisal in hand – prior to seeking a loan can help increase the chances of being approved. Or, if there are some areas where a business may be weak in the eyes of lenders, a business owner can use this information to make changes and improve potential borrowing success. Understanding what lenders are looking for and how a certified appraisal fits into lending criteria can help business owners find the funds they need to grow.

By: Present Value

Understanding Depreciation for Machinery and Equipment

admin — Thu, 15 Apr 2010 23:49:32 +0000

The term depreciation has different definitions depending on the audience you are speaking to. In accounting and finance, depreciation means the allocation of the cost of an asset over time. It is a way of allocating the purchase price of an asset across its useful life, which takes into account what is considered normal wear and tear over the life of an asset. For the appraisers of machinery and equipment, the term means something different. It is the estimated decrease in value from the initial purchase price of an asset based on a number of criteria, including physical, functional, and/or economic factors.

If an asset that is 20 years old is still functional, still being used, or if there is an active market for the asset, it still has value from an appraisal perspective. Although it may not have value from an accounting perspective, if the business owner were to sell the asset it would be worth more than zero, which is what it is valued at from an accounting perspective.

It can be confusing so it’s always best to speak to a professional at Present Value LLC if you have questions about the depreciation of your machinery and equipment or if you are looking to sell.

By: Present Value

Additional Reading:

What’s It Worth?

Machinery and Equipment Types of Value Definitions!

Case Study: Southern California Healthcare Provider

admin — Wed, 14 Apr 2010 01:08:02 +0000

Late last year, Present Value LLC was hired to perform a large inventory project for a healthcare provider in southern California. The company first asked us to help them choose an inventory management system. After researching the available options, we provided the company with three recommendations. The healthcare provider selected the one that best met its needs, and we implemented the system for them. We then formed a comprehensive inspection schedule, and recorded, barcoded, tagged, and identified all inventory for the healthcare provider’s more than 55 offices. In addition to the inventory project, we were asked to appraise the inventory to derive its fair market and orderly liquidation values. At the end of the project, Present Value designed reports for the company describing all of its inventory and the inventory’s two values.

By: Present Value

Additional Reading:

Case Study: International Medical Device Manufacturer

Case Study: Pre-Loan Asset Verification

Manufacturing Operators and Lenders Seek Alternatives to Remain Viable

admin — Tue, 06 Apr 2010 21:51:16 +0000

It may come as a surprise to many people that manufacturing is still the largest industry contributing to the United States gross domestic product. According to government numbers, manufacturing employs approximately 16.7 million workers, meaning that it is still an industry that needs attention. The size of industrial production and significance in the U.S. economy, coupled with the industry’s stagnancy and declining growth, presents a conundrum for companies in these industries and lenders in this sector.

It’s no secret that manufacturing has been in decline for many years due cheaper resource alternatives in foreign markets. The Federal Reserve reported that for February industrial production overall increased by 0.1% following a gain of 0.9% in January. Manufacturing output decreased by 0.2%. While markets other than manufacturing showed increases, they were slight.

Competitive pressures from outside the U.S. will force manufacturers either to develop greater production and financial efficiencies or shut down operations. As a result of the continual declines in manufacturing, investment and lending in this area will likely remain weak. As manufacturing companies downsize or close their doors, lenders operating in this area will need to determine other ways to recoup some of their existing investments, including selling off machinery and equipment.

Whether you need to know the fair market value, orderly liquidation value, and/or forced liquidation value of your equipment, the professionals at Present Value LLC can provide you with a certified equipment appraisal report in a timely manner at a competitive cost.

By: Present Value

Additional Reading:

What’s It Worth?

Know the Value of Your Machinery and Equipment Before an Auction

Certified Machinery and Equipment Appraisal

Case Study: International Medical Device Manufacturer

admin — Wed, 17 Mar 2010 02:50:55 +0000

In late 2009 and into 2010, Present Value LLC was engaged by a bank to perform a certified machinery and equipment appraisal and an inventory appraisal for an international medical devices manufacturer. The bank called for the appraisal in order to confirm the company’s assets as part of its pre-loan due diligence.

Present Value LLC was asked to determine the orderly liquidation and forced liquidation values for the equipment and a portion of the inventory for the company. The machinery and equipment appraisals took place at two site locations. There were more than 500 capital items and more than 1,000 support items to be appraised. The inventory appraisal included a sampling of more than 20,000 products and goods the company currently had in their inventory.

Present Value LLC was asked to perform this in half the normal timeframe because of the time constraints of the loan. We were able to deliver the report on time and to the satisfaction of the client.

By: Present Value

Additional Reading:

Inventory Control Services

Asset Verification

Case Study: Pre-Loan Asset Verification

Businesses Appraised by CMEAs

admin — Thu, 25 Feb 2010 20:49:55 +0000

A CMEA is a Certified Machinery & Equipment Appraisal. It can tell you the fair market value, liquidation value, salvage value, or replacement cost of the equipment and machinery used by your company or business. A CMEA prepared by a professional and licensed appraiser meets the requirements of financial institutions, government agencies, buyers, sellers, shareholders, partners, and the IRS, and will withhold scrutiny in court.

There are many different types of businesses that can benefit from a business appraisal, including many that are out of the ordinary, such as (but not limited to):

Aerial Spraying Services
Asphalt Plants/Sand Pits
Candy Shops
Chemical Manufacturers
Chemical Distributors
Country Clubs
Dental Practices
Donut Shops
Gasoline Stations
Historical Buildings
Ice Cream Stores
Janitorial Companies
Machine Shops
Maid Service Franchises
Mall Specialty Shops
Medical Clinics
Millwork Shops
Moving and Storage Companies
Oil and Gas Refineries
Refuse Hauling Companies
Rock Quarries
Rodeo Stadiums
Supper Clubs
Swimming Pool Builders
Wallpaper Stores
Well Drilling Companies
Well Servicing Companies
Woodworking Shops
Wrecker/Towing Services

Irrespective of your business, a CMEA is the best way to assess the value of your company’s assets. To request a CMEA, contact Present Value today.

By: Present Value

To Sell or Not to Sell?

admin — Thu, 21 Jan 2010 23:06:12 +0000

In previous posts, we have discussed that if a business owner is looking to sell equipment or machinery, he/she needs to know three separate types of value that their assets could bring in the market – orderly liquidation value, forced liquidation value, and fair market value. The differences among these types of machinery and equipment asset valuations are dependent upon the situation of the business and the time frame in which the assets need to be liquidated. Recently, however, we have seen that in certain markets, like California, there may be almost no difference between orderly liquidation value and fair market value due to sluggish market conditions.

Because there is such a large amount of equipment and machinery available in the market, buyers have more options than they normally would. Of course, there are other circumstances that determine the current value of equipment, such as in the case of custom machinery. And for that reason, potential sellers need to know what it’s all worth.

Some sellers, like those whose businesses are in dire circumstances, may be forced to sell and get the best price for the equipment as quickly as possible. However, for others who may not be in such a rush to sell, understanding the current types of equipment value can help them make better informed decisions about whether to sell now or not.

As we have mentioned often in other posts, it is essential for business owners to know the value of their equipment, especially if they are looking to sell so that they can receive the best possible price in the current market.

By: Present Value