Equipment Appraisal Blog | Understanding Machinery Appraisals

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.

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.

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.