Equipment Appraisal Blog | Understanding Machinery Appraisals

When legal disputes involve machinery and equipment, one often overlooked yet critical player is the appraiser. These professionals bring both valuation experience and the credibility needed to serve as expert witnesses in court. Their opinions can have an impact on the overall value differential involved with a case.

Typically, an appraiser is engaged by one side involved in the dispute and/or their legal counsel. However, the valuation is completed objectively, without bias, and with the courts' support to facilitate an outcome. An accredited appraiser with experience in these types of situations should be sought out, as they will provide a supportable, defensible opinion of value along with a qualified report.

Equipment appraisers do more than just assign values when acting as expert witnesses. Their conclusions are based on methodologies that meet the Uniform Standards of Professional Appraisal Practice (USPAP) or other recognized guidelines. Their reports should withstand legal scrutiny and are often central to a case's financial arguments.

Testifying in depositions and court proceedings allows appraisers to explain valuation processes in clear, accessible terms to judges, attorneys, and juries. Under cross-examination, a credible expert can maintain composure under pressure, defending their conclusions with experience and knowledge.

Situations that commonly call for expert appraisal testimony include litigation over business value or asset division; estate settlement; divorce dissolution; damage claims involving machinery (fire, flood, accidents); bankruptcy; investor buyout conflicts; tax court proceedings; and asset liquidation.

Not all appraisers are suited for the courtroom. A dependable expert witness should have professional designations (e.g., ASA, CEA, or other relevant credentials); experience in providing equipment appraisals across a broad range of industries and markets; strong communication skills, both in writing and verbal testimony; and a history of legal experience, including depositions and trial appearances.

Hiring a qualified equipment appraiser as an expert witness can add substantial credibility to a legal case. Their insight helps courts make informed decisions, especially when significant tangible investment is involved, and parties are far off in their internal assessments. If you are facing a legal matter involving machinery or equipment, consulting and engaging with an experienced appraiser early can save time, money, and frustration down the line.

When considering an updated equipment appraisal for your business’s tangible assets, it’s easy to fixate on cost. However, the value of your machinery and FF&E directly affects your bottom line, therefore, cost should not be the number one concern. Reliability should be the driving factor. Appraisal professionals know that a high-quality report is much more valuable than one conducted by an uncredentialed, inexperienced “competitor.”

A lot goes into completing an equipment appraisal behind the scenes that should be documented and presented clearly in a final appraisal report. From data gathering, research, analysis, and report writing, all of these steps go into a high-quality valuation.

Consistent communications and timely deliverables also come with paying more for a quality valuation and engaging with an accredited appraiser. Every business owner should feel comfortable that they are in good hands and can “rest easy” knowing that the job will be completed at the highest level of satisfaction. You simply won’t get this type of service with a cheaper company that uses less experienced employees who don’t have the same skill set.

If you’re presenting your appraisal to a potential lender, insurer, investor, or buyer, they will recommend using someone with the proper credentials and expertise to support their goals. Certified equipment appraisers use industry standards and have the education and experience to properly research, analyze, and prepare a detailed report that will satisfy all requirements. The most qualified valuation professionals should also be able to verify their experience as expert witnesses working with the courts, auditors, and even the IRS in the defense of their opinions.

In summary, although you may pay a bit more to have a high-quality appraisal completed for your machinery and equipment, the extra cost will be more than offset by the reliability of the end product, which can be used to accomplish any number of goals you may have as a business owner. When considering engaging with a professional, take the time to understand why the cost is more than the less expensive option. Then, ask the company providing the cheap option how quality will be factored into their valuation. If the answer is vague, it’s likely a sign that they will not deliver the type of report you need to get your goals accomplished.