Posts Tagged ‘Machinery and equipment appraisal’
Location, Location, Location
One of the things an appraiser has to take into consideration when determining the value of a piece of equipment is its location. Each state is governed by its own set of laws that can affect the worth of a piece of machinery or equipment.
Take California, for example, where Present Value has an office. In California, the Environmental Protection Agency (EPA) has placed stringent laws on construction equipment emissions. The full set of regulations and standards can be found here. If a piece of used machinery doesn’t have the proper upgrades required to make it compliant with those laws, a buyer knows that he’ll be responsible for the investment required to make it compliant, and the equipment, therefore, may be worth less. The same piece of equipment in another state that doesn’t have the same emissions laws will not need the same upgrades and could, therefore, have a higher value.
Keep in mind, when choosing an appraiser, the importance of working with a company that understands the complexities involved in determining the value of a piece of machinery or equipment.
By: Present Value
Present Value: More than an Appraisal Firm
Following up on our press release that went out on Tuesday, December 8, 2009, we’d like to focus a little bit more on some of the characteristics that make Present Value a unique full-service appraisal firm.
While lenders and business owners have many choices when it comes to finding an appraisal company, at Present Value, we pride ourselves on being more than just a company that provides appraisals: we act as a trusted resource for lenders and business owners. We can act as consultants to help guide our clients as they make crucial business decisions, whether it be a lender, looking to conduct pre-loan due diligence or auction assets from a loan default, or a business owner, looking to obtain financing or make an acquisition.
In addition to providing appraisal services, Present Value has the expertise and experience to orchestrate other aspects of these deals. The strength of our services comes from the partnerships that we have developed all across the country. We have the capabilities to bring the right people to the table for whatever our clients’ needs may be, such as auctioneer services or brokerage services. We aim to be problem-solvers for each and every one of our clients, helping them make well-informed business decisions.
Present Value prides itself on its turnkey service offerings, and Present Value is happy to act as a resource for its clients as they cope with past mistakes and look toward improving their processes. Our network of professionals will always deliver the highest quality products, backed by a team of experts in their individual market segments.
By: Present Value
What We Appraised on Our Summer Vacation
We have written a number of blog posts on machinery and equipment appraisals, including What’s It Worth? and Certified Machinery and Equipment Appraisal. We have talked about the complexities of appraisals for custom-made equipment, such as dies, molds, or custom machinery, and the importance of working with an experienced appraisal company to ensure that you know the value of all your machinery and equipment.
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
Article for the NEBBI Newsletter
Chris Kinzie and Chris Spinelli of Present Value had an article featured in the latest National Equipment and Business Builders Institute (NEBBI) newsletter. The NEBBI is an international organization that trains and certifies certified machinery and equipment appraisers to perform appraisals that comply with USPAP standards, and Present Value is proud to be an NEBBI member. NEBBI members share resources and information, cross sell, and network, all in an effort to improve their individual businesses and the machinery and equipment appraisal industry as a whole.
In Present Value’s article, Kinzie and Spinelli discuss the company’s evolution from strictly a real estate appraisal company, to a more diversified company that offers a full complement of appraisal services, including machinery and equipment appraisals. They share with the NEBBI members some tips about creating a business plan, creating a business identity, and creating an effective marketing plan. The full article follows:
The Successful Partnership Between Chris Kinzie, CMEA, San Diego, CA and Chris Spinelli, CMEA Newton, MA
Becoming a CMEA has been a huge benefit to our business. Our background is in real estate appraising and many years ago we wanted to diversify our business into other areas of appraising. As members of the NEBBI we have some of the best resources at our fingertips. We have this incredible forum to exchange information, network, cross sell, and grow. We’ve worked with several other members on joint ventures, included several more on individual assignments, all the while watching the impact on our bottom line increase. It wasn’t a fast process for us and we had to learn our in and outs as any other business. Our hope is that our insight in this article might benefit you and your situations. We thought this article would be good to focus information toward newer members getting their business off the ground or others who might be struggling to get things going. It benefits us all when more of us are doing better.
One of the best places to start when reworking your current situation or just new in the business is to “form a plan.” Sit down and write out a simple business plan which would include what you want to do with this designation and education, research your competition, research the marketplace, who would be your potential clients, decide where you want to specialize (this is an important one), set your time goals, set your pricing for services, financial goals (short-term, long-term), create a budget for your business infrastructure and your marketing.
Create an identity for yourself in this business. It gives you focus and credibility, which is crucial to success. You need to stand out in some way from the rest. One way is to specialize in a particular field of M&E appraising or consulting, another might be to offer a boutique of services. Pull from your background, your interests, or your former career contacts.
Marketing is by far the hardest thing to grasp in business, especially if you’re working the business and your marketing at the same time. We’ve discovered the more personal the interaction with a potential client the greater the chances for turning a lead into a job in a shorter timeframe. People need to know who you are and what you do. People especially listen more when you have something to offer rather than something to sell. Don’t sell someone your service, offer them help. A great way to get in front of people is join a networking group … join a few. It gives you a voice, adds credibility, and provides a new sphere of influence that will grow. You might have to visit a few but when you find the right one it can do wonders. If you don’t know where to start try www.meetup.com.
Another source for leads is your own accountant, CPA, or tax attorney. They may not give you business but they’re a resource to interview and show you the inside track of how they think and where there may be a need. Talk to everyone! If you have a fear of speaking in front of people or making presentations, one resource to work on is www.toastmasters.org.
Follow up, follow up, follow up! If you do a letter campaign, phone campaign, or any other type of marketing you had better follow up on those leads. Be consistent, dedicate time, and keep in contact. If you’re not good at marketing, join forces with someone who is.
So who needs you? Many lenders have approved lists but not like residential appraisers are used too. You might get a call from the lender or they may make the borrower find you. The commercial lending department is a good place to start for the decision maker. From our experience it doesn’t matter which appraisal discipline you work in, typically it comes down to pricing and turn-around time who gets the job. With regard to attorneys and accountants, we’ve found it really depends on their clientele. Most areas have a book of lists, which most business journals have. This has been a good resource to find more about the local and regional leaders in industries. The larger the company the more complex and diverse the needs are for your services; if you’re targeting large corporations you may be looking at multiple decision makers and multiple streams of income.
We hope some of the ideas that have helped us be more successful will help you. Be good and remember to be honorable and upfront in all that you do.
By: Present Value
Asset Verification
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
Exit Strategies
You’ve worked hard to build your business. Small business ownership is a pursuit filled with extremes – extreme excitement, extreme disappointment, and extreme sacrifice. It’s no wonder that deciding how best to leave your business can also be an emotional decision. Today’s topic takes the emotion out of that decision and simply lays out your options.
The first, and most common exit strategy, is to sell the business either to an individual or to another company. A sale of a company would most likely result in the seller receiving cash in exchange for the business. Another exit strategy is a buyout, in which an individual or group of individuals will buy out your ownership of the business and take over its operation. A third exit strategy is a merger, which happens when two companies get together, determine the value of the two businesses, and form one larger business. Or, if a business owner doesn’t have any debt, he or she might decide to simply close the business and sell its assets.
No matter the exit strategy you choose, the most difficult part of any of these transactions is determining the value of a business. Often, because of the worth of intangible assets, like a business’s reputation or customer base, determining a company’s value is not necessarily a simple pursuit. This is why it’s important to have your assets appraised or have a business valuation performed by a certified appraiser who has experience calculating the worth of a business’s tangible and intangible assets. If you are considering retirement, or a sale or closure of your business, contact the professionals at Present Value to discuss your options.
By: Present Value
Pending SBA Loan Policy
The number of Small Business Administration-approved loans is declining — so far this year, the number of loans is down 50% from this time last year. Many factors have contributed to this decline. Lenders say that high fees associated with SBA loans make them less profitable. And the practice of selling loans to a secondary market, freeing up capital to make new loans, froze last fall along with everything else.
In an effort to reverse this decline, Obama’s economic stimulus package tried to make SBA loans attractive again by reducing fees and increasing the government guarantee on 7(a) loans. However, recent SBA policy guidance regarding goodwill may thwart this effort.
Goodwill is the premium that a business buyer pays to a business owner for the business’ established market share, existing customer base, or premium location. Real estate and tangible assets, like machinery and equipment, are not considered part of goodwill. Under the SBA’s new policy, only 50% of a 7(a) loan can be used to finance goodwill, and that 50% may not be more than $250,000. The reason behind the SBA’s policy is that goodwill is a risky investment. In the event of a loan default and business liquidation, goodwill has no monetary value.
This policy will make it difficult for people to put SBA loans toward many business acquisitions, particularly those whose value is primarily derived from existing customers and name recognition. Because concerns have been raised about the ramifications of this change to its SOP, the SBA has agreed to review on a case-by-case basis loan requests that do not meet its policy, and may revise its policy in September of this year.
In the meantime, many banks and attorneys are taking a closer look at the value of a business’ tangible machinery and equipment assets, hoping that their value will offset the limitations placed on goodwill. The certified appraisers at Present Value can help determine the value of those assets. To order an appraisal, click here.
By: Present Value
Why use a certified appraiser?
A survey was recently conducted at an American Institute of Certified Public Accountants Conference in which more than 100 CPAs said that when assigning value to a business’s tangible assets, like machinery, one of the biggest problems they face is liability risk as a result of invalid information. This is one of the reasons why it’s important to have a certified appraiser research and assess your business’s assets and compose a reliable valuation report.
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