Equipment Appraisal Blog | Understanding Machinery Appraisals

Why Does Your Business Need an Industrial Equipment Appraiser?

Posted by Equipment Appraisal Services on Wed, Dec 26, 2018 @ 01:29 PM


Companies in many diverse forms of commerce such as construction, automotive manufacturing, tool and die fabrication, aerospace, and foundries often rely on the use of heavy-duty industrial equipment and freight vehicles to get the job done. Quite often during the course of ordinary business, an accurate accounting or estimation of the value of that equipment is required. That is when your company needs the services of a professional industrial equipment appraiser.

The need for an accurate equipment appraisal might be based on a business reason, or it could be required by a bank, lender, government entity, court, or accountant. At these times a simple book value or “guesstimate” of the equipment value simply will not do. An industrial equipment appraiser provides an accurate, legally defensible estimate of the value of equipment in accordance with the guidelines and Uniform Standards of Professional Appraisal Practice (USPAP). Here are just a few of the many reasons why your business might need the services of an industrial equipment appraiser:

  • Business is good: If you are thinking of merging, selling or expanding your business, you want to have a good handle on how much it is worth. A certified appraisal gives you leverage with potential buyers, and is often required by banks to justify collateral estimates if you decide to take out a loan to finance your strategic growth. Effective in January 2014, the Small Business Administration updated and clarified its Standard Operating Procedures regarding appraisals and valuations accepted for its Lender and Development Company Loan Programs.
  • Business is bad: Sometimes it happens that a business just doesn’t work out, and you need to have an appraisal performed for a partnership dissolution or bankruptcy filing.
  • Always be prepared: We never expect the worst-case scenario to happen, but we certainly need to be prepared. An industrial accident or natural disaster might occur which would require definitive proof of the equipment valuation for insurance reimbursement purposes. If you can’t prove what the equipment is worth, the insurance company might be left to its own best guesses and that seldom works in your favor.
  • Tax and accounting purposes: Quite often your accountant will request an equipment appraisal to back up tax return and depreciation schedule information. Also, businesses that are converting from a C to an S Corporation will require an up-to-date appraisal to verify the value of the company at the time of the conversion.
  • Shareholder accounting and Sarbanes-Oxley compliance: Public companies have an even higher degree of fiduciary responsibility to shareholders. They also have to be in compliance with the Corporate Responsibility Act of 2002, which was designed to improve financial disclosures from corporations. Provisions of this Act require increased corporate responsibility for financial statement accuracy and impose severe criminal penalties for non-compliance.
  • Personal needs: In certain companies, personal needs will sometimes overlap with business functions. If an owner or major shareholder is going through a divorce, setting up an estate, or creating a personal trust, an accurate accounting of the business assets and equipment will be required.
  • Lawsuits: Businesses that are splitting up, or those that are called to defend themselves in a court situation, will need to justify the stated value of the company.

An accredited appraiser takes many factors into consideration to arrive at an accurate equipment appraisal. The skills and experience of an unbiased industrial equipment appraiser will result in a Certified Appraisal Report that you can rely on with confidence to meet any individual reporting requirement.

Tags: industrial equipment appraisal

How is a heavy equipment appraiser different than a regular appraiser?

Posted by Equipment Appraisal Services on Wed, Dec 19, 2018 @ 12:02 PM


When you're working with a heavy equipment appraiser, it's common to wonder what makes them stand apart from regular appraisers. Are they really that different from one of the other? You might be surprised at the answer. The level of education, experience and expertise that is used during the appraisal process by a heavy equipment valuation specialist can be truly astounding. Here's a quick look at some of the differences between a standard appraiser and a heavy equipment appraiser as well as some of the additional training that goes into the process of developing the specialty.

How is a heavy equipment appraiser different than a regular appraiser?

  • How specialized is your machinery? Though a lot of heavy equipment is similar to other models on the market, there are often any number of features and kits that set your equipment off from the rest of the pack. A regular appraiser will deal with a wide range of items, from cars to copy machines to computers. A heavy equipment appraisal specialist, on the other hand, focuses only on heavy machinery. Because they don't deal with all the rest of the equipment on the market, they're familiar with the many ways that your machinery is unique. This allows them to focus on the fact that you've got the hydraulics upgrade kit and optional backhoe for your loader and value them appropriately.
  • What condition is your machinery in? A regular appraiser have a grasp of the fact that it's pretty common for construction equipment to have a few scratches and dents in the course of its daily use, but are they able to recognize the difference between everyday wear and real abuse in the field? Because a heavy equipment valuator is constantly working with machinery that is active in the field, they have a strong grasp of what that equipment should look like and how it should act and react on the job site. This allows them to make an appropriate valuation because they know that your equipment is used, not abused, and they calculate the value of that machinery accordingly.
  • Are there any potential failures that can be prevented to save money and improve value? A regular appraiser doesn't know your heavy equipment as intimately as a heavy equipment specialist does. Because they work with only heavy equipment on a daily basis, they get to know that equipment, including its potential points of failure. They're familiar with many of the signs that key components that are common issues with a particular model are starting to fail, such as a pulley going slightly out of alignment, a hydraulic leak that doesn't seem like much now and similar areas of concern. This allows you to make inexpensive repairs on smaller systems before they crash the entire machine.

When you need to have heavy machinery valued and have the choice between a regular appraiser and a heavy equipment appraiser, understanding the differences between the two can mean hiring the right person for the job or ending up with a poor appraisal that doesn't take the intricacies of your equipment into account. Make sure that when you're having your equipment appraised that you insist on a certified equipment appraiser that has experience in your industry to ensure that you're getting your money's worth and an exceptional appraisal report for your investment.

Tags: heavy equipment appraisers

3 reasons why you should have a farm equipment appraiser check your equipment before selling

Posted by Equipment Appraisal Services on Thu, Dec 13, 2018 @ 11:56 AM

farm equipment appraiser

When you work in agriculture, your equipment represents a large portion of your investment in your farm. with combines costing hundreds of thousands of dollars, many farmers are ready to invest in used equipment. But before you sell your older machinery, have you had a farm equipment appraiser take a solid look at it and provide you with a written valuation report? If you haven't, you may be missing out on potential profits that you can then roll into your farm to improve your operation and situation. Here's a quick look at several reasons why you should always have a farm equipment valuation specialist provide you with an appraisal report before you sell it.

3 reasons why you should have a farm equipment appraiser check your equipment before selling

  1. Can you get more than you're asking for machinery before you scare off potential buyers with prices that are too high? Not knowing your equipment's value in the first place may lead you to make assumptions about what it's actually worth based on the local advertisements, online ads or what your neighbor may have gotten for similar machinery not that long ago. A qualified equipment valuation specialist can determine exactly what your equipment is worth, giving you a solid starting point and a great tool for negotiation.
  2. Are there any ways you can make simple repairs that quickly improve the value of your machinery? When an equipment appraiser looks at your machinery to determine its value, it's important to remember that they work with machinery like yours all the time. This means that they're familiar with all of its quirks, including common points of failure for specific manufacturers and models. If they see something that may appear just a touch off, they may be able to advise you about repairs that will prevent more expensive repairs and improve value for your buyers.
  3. Is your equipment in demand in other parts of the country? If your equipment is not in high demand because of shifting market prices or changing environments, it may still be in demand in other areas. When you work with qualified equipment appraisers, you're seeing professionals who stay on top of all of the latest developments in agriculture. They can tell you whether you're in a good place to sell your equipment or if you may want to look elsewhere, such as an online auction site or similar option, to sell your equipment at the best possible profit in another part of the country or even world.

By having a farm equipment appraiser check your machinery before you sell it, you can improve the profit on your sale and have more money to invest in your operation. But don't settle for your local ag equipment dealership, whose sales reps and appraisers may think they have a vested interest in skewing the results of their appraisal to their own benefit by offering you more or less than your machinery is worth in hope of a quick sale. Don't settle for anything less than a certified equipment appraiser, who has solid experience and expertise in determining the value of your machinery equipment and can provide you with solid advice as to your equipment's real-world value.

Tags: farm equipment appraisers

How a Medical Equipment Appraiser Can Help With a Hospital Merger

Posted by Equipment Appraisal Services on Tue, Dec 04, 2018 @ 10:25 AM

medical equipment appraisal

Hospitals are merging at an unprecedented pace, with mergers and acquisitions consolidating the healthcare industry. Integrating two businesses can be difficult, especially for the smaller player in the transaction, who may have less power in negotiating the merger. A medical equipment appraisal can help ease the transition during a hospital merger by determining an objective value of important business assets. Here's what you need to know about a medical equipment appraisal before a hospital merger. 

What a Medical Equipment Appraisal Tells You 

In a medical equipment appraisal, an appraiser with demonstrated knowledge of the industry will determine the true value of all medical equipment. An appraisal will help you estimate the replacement cost or remaining useful life of the equipment. These figures helps with tax purposes, by helping you determine the appropriate amount of depreciation to take or by determining the true worth of all business assets. Lastly, appraising medical equipment also shows you the fair market value of all equipment, which comes in use when negotiating the terms of the merger or acquisition. 

It is fairly easy to identify the value of common medical equipment, such as MRI machines. For rare equipment, the appraiser may need to do extensive research. By reaching out to the manufacturer, identifying potential buyers, or searching out comparable equipment, the appraiser can value the machinery. 

By taking the value of their medical equipment and their personnel, hospitals can determine their relative worth when being acquired or merging with a competitor.

The IRS will generally require an appraisal during hospital mergers. To satisfy the IRS, the appraiser will need to follow a specific set of criteria. 

How an Appraisal Helps in Hospital Mergers

Without an appraisal, both parties would be relying on best guesses of equipment value, or book values that show what an item might be worth in a theoretical situation. When something as important as a merger taking place, all equipment must be accurately valued so the terms of the deal can proceed. 

Medical equipment appraisals can help equalize diverse companies. If one player in the merger is a specialist, for instance a prosthetics lab with pricey and rare equipment, determining objective value without an appraisal can be impossible. 

Medical equipment appraisals show the true value of business assets, painting a complete picture of each company's worth. Since appraisals are completed by a neutral third party with sufficient knowledge of the medical industry, they do not favor either side in a merger. 

With this data, hospital attorneys can then iron out a deal that ensures that both parties' worths are respected. Starting the merger or acquisition process with respect is essential to the success. If one side feels disrespected during the deal, it can lead to mistrust and suspicion after the merger is complete. 

Given the importance of an appraisal in determining value, it makes sense to get one as early as possible, before both parties begin discussing the merger or acquisition. So you get an accurate valuation of your equipment, find a qualified appraiser with experience valuing medical equipment. 

More mergers and acquisitions are expected among hospitals and medical equipment providers, which means the need for an objective appraisal will only grow. It's smart to seek a medical equipment appraisal before a merger is necessary, so you know your company's worth and can explore all your options without pressure from a third party. Seeking an appraisal at the last minute may bring higher price tags, due to the urgency. 

Tags: medical equipment appraiser