Equipment Appraisal Blog | Understanding Machinery Appraisals

Working in metal fabrication can be a tough enough job, with times of plenty and need, difficult work and exacting specifications to meet. But when disaster strikes, it can become even harder to keep your head above water. Whether it's a shop fire, a natural disaster or a theft from your business, it can seem as though you've only gone through one disaster just to deal with another one: insurance company demands for value documentation. Here's some information on how a metalworking equipment appraisal can help you through the process.

Disaster Recovery: How a metalworking equipment appraisal helps you get through

When you have a disaster in your shop, proving the value of the equipment that has been affected can just add to your burdens during a difficult time. Having an equipment appraisal on hand provides you with a wide range of benefits, not the least of which is being able to immediately document the value of said machinery to your insurance company or a court of law, depending on the situation. 

But what if you haven't had the opportunity to get an appraisal performed prior to the loss? You're not necessarily just stuck with whatever the insurance company or court decides to grant you. Certified equipment appraisers are trained to develop equipment valuations in a wide range of circumstances, even when the equipment has already suffered significant damage or has been stolen. By going back to the date of the loss and studying the documentation you have available, an equipment appraiser can provide you with an appraisal report that can document the estimated value of the machinery, which is especially helpful if your insurance company or the other party in a lawsuit is trying to lowball the value of your metalworking machinery.

How does this work? The equipment appraiser will look at your original purchase documents, photos, records of maintenance, repairs and updates made to the machinery and uses that documentation to develop an estimated value for the equipment.

But how is this more accurate than your insurance adjuster's final figure? Equipment appraisers spend all day appraising equipment, often specializing in a particular type of equipment. An insurance adjuster, on the other hand, must determine values for a wide range of items, from houses and medical claims to liability and structures. They don't know metalworking equipment nearly as well as a certified equipment appraiser does.

Though you can wait on getting a metalworking equipment appraisal until after you've had a disaster, having one on hand ahead of time can help speed the process along with your insurance company or court case. But make sure you're working with a certified equipment appraiser who has experience in the metalworking industry. By doing so, your appraisal report will be prepared using standardized methodologies that have been proven to hold up in legal and insurance circles.

When precision tooling and machining is vital to your business' success, getting a quality CNC machine appraisal helps best protect that significant investment in your business' equity. But these machines are interfaced with a wide range of other tools and operate in a number of different environments, making it very difficult to determine exactly what your equipment values should be. Here are some of the considerations to keep in mind when getting your CNC equipment appraisals performed.

Protect Your Investment with a CNC Machine Appraisal

A Computer Numerical Control or CNC machine provides exact precision control of a wide range of machinery. It can operate mills, lathes, plasma cutters, wire erosion, water jet cutters, drills, routers, grinders and many other pieces of machinery to meet the exacting specifications of a wide range of projects. They can range in price from a few thousand dollars to well over $100,000 a piece, depending on the level of precision required and the size and specifications of the tools to be used. A certified appraiser should have experience in CNC machines due to their complex nature.

With this type of cost, it's easy to sink a significant amount of capital into these machines. When you have a certified equipment appraiser provide you with documentation of the equipment values, you can make better decisions about your investment. An appraisal might tell if your machinery is beginning to wear due to high hours. It might also tell whether the machinery has been well or poorly maintained, helping decide which used machinery to purchase for your business. If the market has been shifting, it may be able to tell whether you should invest in additional equipment or sell off excess CNC machines to ride out the storm of an industry downturn. 

If your business suffers a loss due to theft, vandalism or a disaster, having an appraisal on your machinery helps you get what your business needs from a reluctant insurance company. It helps you prove value if you're using your CNC machine as collateral for a financial institution if you're expanding your business or taking advantage of a new opportunity. A certified equipment appraiser can even provide a value for your CNC machinery after it's been damaged in a fire or donated to a charitable organization. But without having a proper machinery valuation in place, you may find that you're losing out on your business finances.

By getting a quality CNC machine appraisal, you can ensure that your business' investment is protected, whether you have an insurance loss while dealing with a difficult adjustor, need to document value when selling a business or the information you need to determine when it's time to replace aging machinery. But you need to make sure you're working with a certified equipment appraiser who has experience researching CNC machinery. A certified appraiser has the training and experience to prepare machinery valuation reports that are based on standardized methodologies and for that reason, will stand up to scrutiny in legal, financial and insurance circles.

When your company is undergoing a change in ownership, you may already be having enough to do just keeping things going. But have you considered how a metalworking equipment appraisal can help? Here are some situations where getting a metalworking equipment appraisal done ahead of a serious change can help make things go more smoothly and with much less drama:

Bankruptcy

In a bankruptcy, you may be forced to liquidate your assets to pay some of your creditors, At this point, a machinery valuation is often based on liquidation values, either through an orderly liquidation, forced liquidation or liquidation in place. Having a machine appraisal completed by a qualified, certified machine appraiser helps ensure that you can sell the least amount of equipment to settle your debts, helping keep your company more intact than may otherwise be possible.

Divorce or Partnership Dissolution

Though this type of situation can also lead to asset liquidation, it's much more likely to be finished amicably if both sides know that a fair and logical process of determining equipment values has been followed. In this type of situation, the party getting out of the partnership will often want the highest possible valuation while the other party will want the lowest valuation in order to pay the least amount to keep the business solvent. Having a certified machine valuation specialist develop a quality report based on standardized methodologies helps ensure that both parties get a fair equipment value.

Corporation Restructuring

When certain laws went out of effect a few years back that were keeping C corporation taxes low, many businesses have begun considering changing their corporate structure to a pass-through organization such as an S corporation. If company equipment values have been inflated in the past or not properly depreciated, they could carry inaccurately high capital gains through the conversion process. In businesses where this has happened, the amount of capital gains often completely wipes out any potential tax savings that the company would otherwise have realized during the through the restructuring process.

Business Sale, Purchase or Merger

How would you like to go to the negotiating table with a tool that helps guarantee that you'll get a fair price for the company you're selling, buying or merging? Equipment appraisals help provide legal documentation to back up your asking price, but only when they're completed by a certified equipment appraiser. Because metalworking companies often have a lot of capital tied up in machinery value, knowing the exact fair value of that equipment is a very strong bargaining chip when negotiating a business ownership transaction.

Settling an Estate

When a business owner passes on, there can be a million tiny and not-so-tiny details to attend to, especially if the owner died unexpectedly. Because estate taxes can take a large chunk out of a business legacy, knowing exactly what the equipment is worth makes a big difference in how large a bite the IRS takes. If the business owner wished for donations of equipment to be made, a certified appraisal report must be filed with the proper IRS form to ensure the donation can be tax deductible.

By having a metalworking equipment appraisal already in place, you can avoid some of the hassles and headaches these situations may create. If you haven't had a chance to have a quality machinery and equipment appraisal performed by a certified machine appraiser, why not take the opportunity to do so now? At Equipment Appraisal Services, our highly-qualified equipment appraisers are ready to help at any time. Please contact us today with any questions or to schedule an appointment with an equipment appraiser.