Present Value Blog » Asset Verification

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

admin — Fri, 27 Nov 2009 04:01:38 +0000

Asset verification is a significant part of Present Value’s services. We’ve written about it in the past here and here. Today, we’ll highlight a real-world example that demonstrates the importance of asset verification for responsible due diligence.

Present Value had a client who owned a strip mall that included a movie theater. The movie theater began to lose business, the theater owner could no longer pay rent to the property owner, left the strip mall, and defaulted on his equipment loan. According to the terms of the lease, the property owner could take over everything in the property in 45 days.

Present Value was asked to appraise the equipment in the movie theater and came up with a value one-fifth the value of the loan. The reason for the huge discrepancy was that when the movie theater operator took out his equipment loan, he misrepresented the value and type of movie equipment he owned and planned to purchase. As a result, when the theater owner defaulted on the loan, the lender lost quite a bit of money.

This problem could have been prevented if the lender had requested an asset verification prior to approving the loan. If this had been done, the lender would have had assurance that the equipment it was supporting was equal to the value of its loan.

By: Present Value

Asset Verification

admin — Fri, 28 Aug 2009 14:27:33 +0000

Oftentimes as part of the operation of their businesses, business owners will secure financing or investors to support the purchase of machinery and equipment. Investors and lenders, who have their money tied up in a business, want to and need to know where and how their money is being used.

While it is of course necessary to know the value of the said assets, sometimes investors simply want to ensure that their investment is being used in the manner that the business owner has reported with regard to machinery and equipment assets. Asset verification can be used to determine that the physical assets of a business exist. For a construction business, this could be verifying that there are three backhoes, five dump trucks, eight Bobcats, etc. For a private oral surgeon’s office, it could be one x-ray machine, four dental sinks, four dental chairs, etc.

In a previous post, we discussed Present Value’s inventory control services. In addition to this, Present Value can provide investors and lenders with asset verification reports that confirm a business’s physical assets.

By: Present Value