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

The new edition is expected to be available in October. However, ASB has issued a Summary of Action that will enable appraisers to become familiar with the changes that are part of the 2010-2011 edition. The changes will take effect on January 1, 2010.

The majority of revisions were made to the ETHICS RULE, the COMPETENCY RULE and STANDARD 3: Appraisal Review, Development and Reporting.

Two of the most significant changes are as follows:

• “A requirement was added to the Conduct section of the ETHICS RULE, stating that, prior to accepting an assignment (and if discovered at any time during the assignment), an appraiser must disclose to the client and in the report certification any services regarding the subject property performed by the appraiser within the prior three years, as an appraiser or in any other capacity.”

• “The appraiser’s obligation to allow a client access to his or her workfile when providing a Restricted Use Appraisal Report was removed.”

Present Value is a certified appraisal company and provides USPAP-compliant appraisal reports.

By: Present Value

Some businesses may succumb to the downturn and will need to sell off assets in preparation for bankruptcy declaration. Others, still stinging from tax time, may simply be searching for ways to save on taxes next year. Still others may be considering an equipment purchase or an acquisition of a struggling business. Present Value can assist business owners in any of these three situations by conducting certified business or equipment appraisals.

“When planning their reactions to the current economy, it’s important for our clients to know the worth of their assets,” said Chris Kinzie, Present Value co-founder. The company recognizes that many of the regulations surrounding equipment appraisals and business valuations can be confusing, and Present Value seeks to provide its clients with the necessary information to help them make informed, prudent business decisions. “We want to help our clients not just make the next choice, but the best choice,” added Kinzie.

Check out our press release on Yahoo Finance: http://finance.yahoo.com/news/Present-Value-LLC-Helps-prnews-15133330.html?.v=1

By: Present Value

By Present Value LLC

Example:

XYZ Company provides Present Value with a asset list. After reviewing the asset list Present Value determines there are 200 total items with 30 capital items. 170 of these items are considered support items and will be placed in different groups and given value at no additional cost. The remaining 30 capital items will be appraised individually as line items. (30 capital items X $90 per capital item = $2,700. Total cost of appraisal $2,700.

For More information or to receive a quote on your next Certified Machinery & Equipment Appraisal please contact Present Value at 866 466 8555 of visit us at www.presentvaluellc.com

By: Chris Spinelli

Present Value LLC

SUMMARY APPRAISAL REPORT
A summary appraisal report is typically utilized for estimating the value of machinery and equipment. On-site inspection details are included in the appraisal report. This USPAP compliant report expresses value as a single figure for each tangible asset valued and the aggregate is reported as a single number.

DESKTOP APPRAISAL REPORT
A desktop appraisal report is typically used to determine value without the expense of an on-site inspection and detailed analysis of the condition of the machinery or equipment. You send us pictures and a brief description of the machinery or equipment and we provide a value based on this information.

By Present Value LLC