Equipment Appraisal Blog | Understanding Machinery Appraisals

Performing Maintenance and Keeping Updated Records for Your Equipment

Posted by Equipment Appraisal Services on Mon, Feb 06, 2023 @ 07:30 AM

Machinery Equipment Appraisal Maintenance Records

The importance of maintaining your company’s machinery cannot be stressed enough, as it provides immediate and future benefits to the reputation and overall success of your business. It is just as essential to track and record these practices in as much detail as possible, so you can perform reviews, understand when component replacements and refurbishments are necessary, and have them available to buyers when you look to resell these assets in the future

Capital machinery & equipment represent significant investments for businesses that manufacture goods, engage in earth moving and construction projects, manage utilities, and many other types of operations that offer products and services to their respective clients. And because equipment depreciates and has limitations to its normal useful life, it is even more critical to prioritize consistent maintenance practices that will minimize a loss in value and maximize the time before needing to replace them.

Market perception is potentially the most important factor when your business and its associated assets are involved with external transactions, whether that involves a sale, working capital infusion, new equity investment, bank financing, insurance assessment, or anything else. There will come a time when assessing the value of your used machinery & equipment will be a necessary step in a larger process, the success of which will hinge on your company’s growth or transition.

Customer perception can easily be swayed in one direction or another, based on their opinion and understanding of the integrity of your work ethic. If your machinery is not well maintained and accurate recordkeeping is not available for review, these clients may arbitrarily decide that there must be other deficiencies and flaws with your company. In the counter scenario, there will be a more favorable opinion of business practices in general if your machinery is in good operating condition with updated records available.

Without these maintenance practices and records in place, when the time comes to resell your used equipment, potential purchasers will factor in any number of unknown expenses and investments that may be needed to bring the assets back into reliable service. The impact will affect not only the immediate sale but potentially any future dealings as well.

If you haven’t already, take some additional time to review these practices with your plant manager or maintenance supervisor, so you can create the best environment where your machinery & equipment will outshine your competitors.

Tags: equipment values, Machinery & Equipment Appraisals, maintenance

Supply Chain Bottleneck Effects on Valuing Import/Export Businesses

Posted by Equipment Appraisal Services on Mon, Nov 15, 2021 @ 07:00 AM

Machinery Equipment Appraisal Supply Chain Crisis

By now, most people are aware of the supply chain crisis and its impact on many parts of our lives, both personal and business. Facing some of the worst of these issues are international importers and exporters who are experiencing unprecedented increases in product costs associated with purchasing, shipping, handling, and significant delivery delays.

From an appraiser's perspective, questions have arisen regarding the impact of this global problem when it comes to valuing the equipment, personal property, and inventory of the assets for these businesses.

Historically, appraisers have largely been engaged to assist in the customs process, which requires an appraisal on property being shipped overseas. While valuation companies are still involved in this area, the overall marketplace and the effects on both new and used machinery & equipment, as well as how long this crisis might persist, is the more prevalent topic today.

Supply chain issues are affecting other businesses on varying levels as well. A good example is the automotive industry. The new vehicle shortage they are experiencing has led to a sharp increase in prices for both new and used cars and trucks. Delivery delays are also causing significant price increases at grocery stores, furniture retailers, building construction firms, manufacturing companies, and others.

When valuing machinery & equipment in these markets and industries, an appraiser will research and analyze each situation, and determine a reasonable approach to measuring this impact, especially if they believe these supply chain issues are going to continue well into the coming year. Given the uniqueness of this situation, this will likely involve a subjective opinion from the appraiser based on the information uncovered, the level of change from more normal conditions, and the short or long-term effects this will have on the market and the assets involved.

When the need for an appraisal occurs in your import or export business, ensure that you engage with an accredited or certified valuation expert with the experience required to deliver reasonable and supportable opinions.

Tags: equipment values, machinery appraisal, import, export, supply shortage, supply chain

Why an Equipment Appraisal is Important in a Divorce Proceeding

Posted by Equipment Appraisal Services on Mon, Nov 02, 2020 @ 08:00 AM

Equipment Appraisal Divorce Proceeding

 

He said, She said: when it comes to a divorce, many of us know it can be very stressful. With all that is happening to determine your future, you probably are not considering the importance of an equipment appraisal. If there is a business associated with the split, however, you need to look at this option, as there may be significant value in the tangible assets of the jointly owned company. An independent valuation by an accredited or certified appraiser of the tangible assets for the business, whether it is a trucking company, construction contracting business, landscaping or any similar operation is vitally important. In addition, the report will be supportable in court and take away any biased information you may be receiving from the other side. Here is what else you need to know:

The appraiser will act as a neutral party, providing a fair value for your equipment. If your appraisal report is not prepared by an accredited or certified equipment appraiser, it will likely be contested or thrown out in court during proceedings. If you believe there is a likelihood that the litigation will evolve into court proceedings, you will also want the appraiser to have experience as an expert witness, testifying as to the credibility and accuracy of the valuation report.

The most common premise, or definition of value utilized for divorce proceedings is Fair Market Value, however you should check with your attorney to ensure this is appropriate in your case. There are liquidation values you may need to consider as well, that can be reviewed and discussed prior to the engagement. Both parties should agree to the appraisal, however, if this is not possible, the fact that you engaged an experienced appraiser on your own will carry a lot of weight in ultimately determining value.

Understanding all that is involved during a divorce, including the need for an accredited or certified equipment appraisal can ensure you are receiving the best settlement possible. You or your legal counsel can get in touch with one of our professionals at equipmentappraisal.com to discuss the details further and receive a free quote for our services.

Tags: Divorce, equipment values, appraisal, legal

What to Look for in a Manufacturing Equipment Appraisal

Posted by Equipment Appraisal Services on Thu, Nov 12, 2015 @ 10:30 AM

manufacturing_equipment_appraisal-1

When you need an appraiser for a piece of manufacturing equipment, it is important that you hire the right equipment appraiser -- a person who is uniquely qualified to appraise the piece of equipment you have. Yet, how exactly do you go about finding the right person for your manufacturing equipment appraisal, especially if you have a tight deadline? Learn our tips for selecting a qualified equipment appraiser to pick the right person for your present need. 

Finding a Qualified Machine Appraiser: What to Look For

An appraiser performing equipment valuation can have a lasting impact on the value of your business assets, so it is vital that you pick the right person for the job. Here are several criteria we recommend using when selecting a manufacturing equipment appraiser

  • Certified - To protect yourself and get an accurate machinery valuation, look for an appraiser who is certified by one of the major industry associations, such as the American Society of Appraisers, and holds a specialty in machinery and technical equipment appraisals. Since appraisers come to the field from different backgrounds, they may have different work histories and educations. As long as they have a professional certification, they are independently certified to have the right experience for the job and you can hire them with confidence. 
  • Independent - In some cases, you may be getting a piece of equipment appraised to satisfy someone else. Perhaps your company is merging with another, or you are getting something appraised for insurance purposes. In these cases, there is another party who has a vested interest in the equipment's value and who could stand to benefit from a lower appraised value. For this reason, we recommend hiring an independent equipment appraiser instead of someone who has a tie to the parent company or insurance company. At Equipment Appraisal Services, we offer independent machinery appraisals to individuals and companies. 
  • Knowledgeable - Machine appraisers specialize in different niches and industries. One might be an expert in car manufacturing equipment, while another might be a scientific equipment appraiser, and another a farm machinery appraiser. You wouldn't take a tractor to an appraiser who regularly appraises scientific equipment; that individual would not have the degree of knowledge necessary to accurately value your equipment. Before you hire any appraiser, make sure they know your niche. 
  • Personable - Finally, you will need to discuss the appraisal with your appraiser so you understand the equipment value of your machinery and can act accordingly. For this reason, we recommend hiring an appraiser that you have a personal connection with, and who possesses all the criteria listed above. 
  • Fits Your Budget and Time Frame - In many cases, you have a time constraint and a budget for your machine appraisal. A qualified appraiser should be able to quote you a cost for the equipment appraisal and estimate a time frame of when they can complete the appraisal for you. To reduce your stress and ensure the best possible outcome, it is important to ensure that any appraiser will be able to meet both your budget and your time frame before you begin. 

Before you hire an appraiser to generate equipment values, ask them several questions either in person or over the phone to gain an understanding of their qualifications for your needs. Then hire someone with whom you feel comfortable and confident proceeding. Have you ever had to hire equipment appraisers? What criteria did you use to make your choice? 

Tags: equipment values, equipment appraiser, manufacturing equipment appraisal

Understanding Levels of Equipment Values When Selling a Company

Posted by Equipment Appraisal Services on Fri, Sep 04, 2015 @ 11:00 AM

selling_a_company

The price you would be willing to accept if you were selling a company is highly related to your motivation for selling your company. If someone came up to you and held a gun to your head, you would probably agree that any price they suggested was reasonable.  If you were a billionaire and decided you were tired of one of the companies you owned, you could take your time and wait until you got the price you wanted.

Before selling a company with assets that include expensive machinery and equipment, it is important to know the machinery and equipment values. A machinery and technical specialties (MTS) appraiser is the person to call because he or she has the specific knowledge and expertise it takes to accurately determine machinery and equipment value. A professional equipment appraiser will do a thorough analysis of the equipment, taking into account its age, condition, replacement cost, and many other factors. In addition to the in-depth analysis of the machinery and equipment, the reason for selling a company will help the appraiser provide you with the most accurate equipment appraisal.

Levels of Machinery and Equipment Values

Levels can be thought of as reasons for selling a business. While there are many nuances to machinery valuation, most sales can be categorized as being sold at fair market value, at an orderly liquidation value, or at a forced liquidation value. Each of these values take into account the uses for the equipment, the compulsion to buy or sell, and the time that you have to sell.

Fair Market Value

Used machinery equipment appraisals are opinions and the value quoted is a starting point for negotiation between the buyer and the seller. It is natural for some tension to exist between the two parties to any negotiation. If a buyer is in desperate need of a seller's equipment, the seller can usually negotiate a higher price. If the seller "needs" to sell equipment, the buyer may get the equipment for a bargain. When a willing seller and a willing buyer are under no compulsion to buy or sell machinery or equipment, a machinery and equipment appraisal can help to establish a fair market value and facilitate a sale. 

Example: A seller could command top dollar for his machinery under the following scenario. A crucial piece of machinery breaks down and halts the production line. For every day the machinery is down, the company loses $10,000. The owner of the manufacturing company finds out that it will take three months to fabricate a new machine. So, he scrambles around and finds another manufacturing company that has the same type of machine. Under normal circumstances, the machine may have a fair market value of $50,000, but because the buyer is in a desperate situation, the seller can ask and get $70,000 for his machine.

Orderly Liquidation

In an orderly liquidation, the seller has a reasonable amount of time to sell the company's machinery and equipment. A machine appraiser would consider the date at which the machinery must be liquidated and the reasonable valuation that would attract a willing buyer within that time period. An example of the need for an orderly asset liquidation might be an owner who wants to retire by a certain date and will need the proceeds of the sale to buy his luxury condo in Miami Beach.

Forced Liquidation

A machine appraisal would probably come in at the lower end of the spectrum when the sale of a machine is mandatory and not a matter of choice. A judge in a bankruptcy case may order the machinery, equipment, and other assets of a company to be liquidated in an attempt to compensate unpaid creditors.

Equipment appraisers are careful to examine all the factors that go into the value of equipment. Sometimes, why you are selling is almost as important as what you are selling.

Tags: equipment values, equipment appraiser, selling a company