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 can provide you with a certified equipment appraisal report in a timely manner at a competitive cost. Our certified equipment appraisals will meet the requirements of financial institutions, government agencies, buyers and sellers, shareholders, and partners. Our experience and expertise extends across all machinery, equipment, and technical specialties. Below are examples of some of the industries in which we specialize:

• Health Care and Medical Industry – Examples of equipment appraised: MRI Imaging Systems, CT Scans, Ultrasound Equipment, Dental Offices, Nursing Homes, Hospital Equipment, Cardiovascular, Ophthalmology, Nuclear Imaging, Orthopedics, Surgical Centers, EP Systems, Physical Therapy Clinics, X-Ray Machines, Advanced PET Systems, PACS Systems, and more.

• Manufacturing Industry – Examples of equipment appraised: Plastics Manufacturing, Machine Shops, Woodworking Equipment, Agriculture Equipment, Routers, Sanders, CNC Equipment, Lathes, Conveyers, Air Compressors, Industrial Tanks, Brake Presses, Extruders, Saws, Planners, Vacuum Pumps, Drill Presses, Benders, Die Cutters, Saws, Molds, Tooling, Cutters, and more.

• Heavy Equipment and Construction Industry – Examples of equipment appraised: All Yellow Iron, Excavators, Compressors, Stackers, Aerial Lifts, Crushers, Spreaders, Backhoes, Cranes, Dozers, Rigging Equipment, Skid Loaders, Shop Equipment, Oil Field Equipment, Asphalt Plants, Washing Equipment, Incinerators, Drilling Equipment, Generators, Railroad Equipment, Tractors, Trucks, Trailers, Environmental and Recycling Equipment, Sweepers, Soil Stabilization Equipment, Aggregate Equipment, and more.

By: Present Value

Additional reading:

Certified Machinery and Equipment Appraisal

Businesses Appraised by CMEAs

Oftentimes, as we have discussed in numerous post about auctions, when most people talk about auction value, they are talking about pricing for a public auction sale or “forced liquidation value.” This is where misconceptions about auction value can occur. It often assumes an unwilling seller acting under duress; in addition, it implies a diminished sales value because of buyers taking advantage of the unwilling seller.

By using forced liquidation value to mean auction value, it also presupposes inflationary or depreciable conditions that affect sales, such as physical location, difficulty of removal, adaptability or specialization, marketability, physical condition, overall appearance, and total psychological appeal. It also means that the seller must find interested buyers during a marketing period of 90 days or less. Also inherent in this definition is the understanding that all equipment or assets listed be sold on a piecemeal, “as is/where is” basis, with the buyers being responsible for removal at their own risk and expense.

By using this definition for auction value, there is no consideration for additional values that might be obtained due to product line, equipment in place, ongoing operation, or other elements of value that could or might be produced at an auction sale.

Not all auction sales occur under forced sale conditions, and auctions sometimes produce a wide array of price points equal to many value definitions, so it makes sense to always make sure you use a certified equipment appraisal to understand all the definitions of value in an auction setting. Present Value can represent companies throughout the whole auction process.

By: Present Value

Additional Reading:

Know the Value of Your Machinery and Equipment Before an Auction

Case Study: Equipment Appraisal for a Lending Institution

Machinery and Equipment Auctions

For example, many auction companies advertise that they perform appraisal services when in most cases, their primary business is the performance of an auction and not being an independent appraisal entity. Oftentimes, an auction company will perform an appraisal in lieu of obtaining a certified equipment appraisal as part of an agreement to list and sell the property. However, because the auction company potentially has a vested interest in the outcome of the auction, their appraisal is not unbiased, which could result in an inaccurate estimation of value.

Another example we can look at is how large lending institutions perform and order valuations. The Small Business Administration requires lenders to obtain third-party valuations so there is no appearance of collusion between the appraiser and lender. Furthermore, if the valuation was not properly defined and constructed, this could affect a borrower’s ability to obtain financing for purchase or sale situations, or jeopardize buyouts, refinancing, buy/sell agreements, and anything pertaining to the value of the assets.

Make sure that your equipment appraiser is an independent third party who can truly act and perform in an unbiased manner so that the appraisal meets the requirements of financial institutions, government agencies, buyers and sellers, shareholders, and partners, and so that you really know what it’s all worth.

By: Present Value

Additional Reading

Be Sure to Use a Reputable Appraiser

Machinery and Equipment Auctions

Equipment Auctions

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.

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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

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.

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Additional Reading:

What’s It Worth?

Machinery and Equipment Types of Value Definitions!

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

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.

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A period of growth, for some companies, might require expansion financing to obtain capital to grow their business. Such financing could be used to support the business’s growth through endeavors such as hiring additional staff, purchasing equipment, acquiring real estate, or ramping up marketing efforts.

Businesses need to demonstrate the clear value of their growth in order to justify financing. While the sources of financing can vary greatly – from banks to friends and family members – for the most part, lenders will require detailed, complete business and operating plans. As we discussed in our last post, lenders are conducting more vigorous due diligence than in the past. So, in addition to the traditional business information, lenders are requiring third-party appraisals to provide greater protection for themselves and their investments.

An appraiser must be able to take into consideration all aspects of a business, including operating costs, assets, equipment, revenue, etc. in order to establish a complete picture of the value of a business. Business potential, economic growth, and market growth are other factors that need to be taken into account for this type of appraisal.

In addition to providing clarity to a potential lender, an appraisal can also help business owners make crucial decisions in a time of economic uncertainty.

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Fair market value (FMV) is the estimated potential value of equipment and machinery if it were sold in an open market. The following assumptions are made when determining FMV:

• Both the buyer and the seller are willing and knowledgeable about the asset, and neither party is being forced into the transaction.
• The market is open and accessible by many buyers and sellers.
• All rights and benefits attributable to the asset are included in the sale.

Additional factors are considered when assessing FMV: the cost or selling price of the item, sales of comparable assets, replacement costs, and expert opinions. FMV can be somewhat subjective because it is based on the circumstances of place and time, and the availability of sales data for comparable machinery or equipment.

This concludes our series of posts on the three types of asset values that a business should know prior to an auction. Understanding the three types of asset value that should be provided by an appraiser can help a business set appropriate price ranges at auction and receive the highest possible profit from auction sales.

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Recently at Present Value, we have worked on some fascinating appraisal projects that we thought might of interest to our readers and also show the breadth of businesses that we work with on a daily basis.

The first project of interest was a radiology clinic, where we appraised the various X-RAY, CAT-scan, and MRI machines that comprise the assets of the business. Another cool project was at a construction company. In this case, we appraised all of the large earth-moving equipment – backhoes, front-end loaders, and dump trucks – and smaller equipment like Bobcats. One of the most fun projects was for a movie theater company that had a dozen theaters and one IMAX theater that we appraised.

Although these projects varied widely in scope and by industry, they demonstrate that understanding the value of machinery and equipment assets are of paramount importance to any business.

By: Present Value