Equipment Appraisal Blog | Understanding Machinery Appraisals

How an Equipment Appraisal Will Facilitate Your Business Goals

Posted by Equipment Appraisal Services on Mon, Apr 19, 2021 @ 08:00 AM

Machinery and Equipment Appraisal Business Goals

Regardless of the industry you work in or the business you own, there will likely come a time when you need to obtain an updated equipment appraisal as you continue to transact in the marketplace. Whatever future plans you have for your business, it is very likely that an appraisal of your capital assets will be beneficial to the process, and possibly even a requirement.

Here a few of the most common reasons why an updated equipment appraisal will be a valuable resource for you:

Bank Financing & Leasing

The most common instance where an appraisal is beneficial and required by all the parties involved occurs when you look to raise capital to maintain and grow your business. The traditional process is working with banks, leasing companies, and similar financial institutions who will require a review of the company’s assets.

If your business requires machinery & equipment to effectively operate, as most manufacturers and service providers do, an updated appraisal will support the current value of your machinery as part of the loan approval process. These assets may end up being the primary collateral the finance company needs for you to successfully secure the loan you need.

Private Equity Investment

A secondary source your business may need to secure capital is in the form of private investment, in the form of equity, which will allow your business to expand its resources and promote growth.

These investors may want to acquire a stake in your business before laying out cash, which will need to be supported by a valuation of your company and the underlying capital assets. Machinery & equipment items generally support a long useful life which will translate to value retention over time and therefore, these assets will comprise a significant component to the overall business value.

Buying & Selling

If you’re considering buying or selling a business, or distinct machinery & equipment as part of a larger transaction, you will want to consider an appraisal to confirm your assumptions about the value of these assets. The time and tension involved in successfully negotiating a sale is significant enough to have a third-party experienced appraiser provide you with the assurance that your pricing strategies are supported and credible.

Tax, Accounting & Insurance Compliance

Tax, accounting and insurance requirements are numerous when it comes to maintaining compliance with all of these facets of your operation.

Tax assessments and regulations, accounting standards guidelines for capitalizing and depreciating your equipment, and adequate insurance coverage are just some of the boxes you need to check in these important areas. Routinely communicate with your accountants and agents to ensure you are up to date on these requirements and see if an equipment valuation might benefit the process, both long and short term.

In summary, your company’s revenue and income typically fluctuate over time depending on the markets and industries you operate in however, the value of your machinery & equipment will likely remain steady through these periods. Understanding the current value of your machinery & equipment by hiring an accredited, experienced appraiser will benefit your business across multiple fronts and provide you with peace of mind as you go forward into the future.

Tags: valuation, business planning, certified equipment appraiser, Machinery & Equipment Appraisals, business goals

What's involved in the process of becoming a certified equipment appraiser?

Posted by Equipment Appraisal Services on Tue, Oct 16, 2018 @ 10:03 AM

When you're considering having a machinery valuation done, have you ever considered what makes a certified equipment appraiser qualified to determine the value of your equipment? It's a bit of a process, but we thought we'd share what our appraisers go through before they're considered ready to look at your machinery and come up with a solid value that will hold up under strong scrutiny. Here's what's involved in becoming a certified machinery appraiser.

What's involved in the process of becoming a certified equipment appraiser?

There are several different appraisal associations, each of which often has their own appraiser certification process. The ASA focuses on pure appraisal science and is the premier appraisal society in the US. The ASA accreditation is one that lenders and attorneys look for as the bar is high to obtain compared to some of the others.

Almost every certification process entails a combination of education and experience. To become certified, an appraiser needs to have a certain amount of time in training, whether in a curriculum of specific courses or a range of continuing education classes to make up their education. Methodologies need to be standardized based on historical performance to ensure that they hold up well to strong scrutiny, whether that's in a court of law, a tax agency, a financial institution or an insurance claim. 

Experience is typically developed under a senior appraiser who can show a new appraiser how to approach the valuation process and some of the variables they may encounter in the field. This experience typically lasts several years, providing the appraiser with the opportunity to pick up experience with a wide range of machinery, exposing them to a number of different aspects of the process. This will also give them the opportunity to see how valuation works in practice, depending on the specific need for the appraisal and why it's needed.

Once the candidate has acquired the necessary education and experience to complete their program's requirements, they'll need to pass an in-depth exam that provides the association with a solid idea of the candidate's abilities. This may include a range of question types, from basic multiple choice or answer-selection formats to requirements to explain in detail how to appraise a specific item and why the appraiser came up with that specific value in that particular situation. Once they've passed the test, they're able to receive their certification and begin practice as a certified equipment appraisal specialist.

Now that you know what's involved in the process of becoming a certified equipment appraiser, you'll have a better grasp of what your appraiser has gone through to be able to provide you or your business with a solid idea of what your equipment is currently worth. The methodologies used in developing a certified appraisal report provides you with a solid basis for value, whether you need the appraisal for a sale, insurance, legal purposes, taxes or financing for your company.

Tags: certified equipment appraiser