Machinery and Equipment Appraisals
Whenever there is a question regarding value of a particular tangible asset, there is also risk involved. It may be the risk of selling an asset too low or paying too much, the risk of being under-insured, or the risk of not receiving your fair share in a settlement or division of property.
National Business Valuation Services, Inc.’s national Machinery & Equipment practice can help you manage these and other risks by providing a “Certified Machinery & Equipment Appraisal” according to standards set by the CMEA designation and the Uniform Standards of Professional Appraisal Practice (USPAP). Our professionals are certified and experienced having completed hundreds of machinery and equipment appraisals including the largest contract ever awarded to a machinery and equipment appraiser in the NEBB organization. (This contract was awarded by the FDIC and was comprised of the furniture, fixtures, machinery and equipment for 55 banks.) For the past 5 years, we have been providing services to companies in the Bakken Shale, North Dakota, as well as Montana and Wyoming. We have valued individual companies worth over $100 million with equipment of over $30 million. (A small sample of some of the oil and gas equipment we have valued includes: Man Camps, wire line tooling, roustabouts and pipe pullers, blowout preventers, transformers, mud pumps, tanks, etc.) We continue to provide appraisals to various banking institutions and Individual companies.
Accurately identifying and recording business assets is important in establishing a creditable and defensible final opinion of value. National Business Valuation Services, Inc. provides machinery and equipment appraisal reports for:
- SBA Lending
- C-to-S Corporate Conversions
- Estates Settlements
- Trust Agreements
- Retirement Planning
- Financing Buy and Sell Agreements
- Asset Verification
- Inventory Inspection
- Partnerships (Buy Ins and Buy Outs)
- 1031 Exchanges
- Mergers and Acquisitions
- Gifting for Tax Purposes
- Insurable Value
- Divorce Settlements
- Purchase Price Allocation
Standard Of Value
There are several “standards of value” that an asset can be valued under. Each “standard of value” will produce a different market value for the same asset, depending on the intended use of the report. Selecting the proper “standard of value” is essential in arriving at the correct market value under the highest and best use definition.
National Business Valuation Services, Inc. utilizes the following definitions regarding the “standard of value”. The definitions are listed in order from the highest estimate of value, descending to the lowest estimate of value.
Fair Market Value (1) – FMV – In Place (in use): The most probable market price expressed in terms of cash equivalents an asset should bring in a competitive and open market under a reasonable time period at an asset’s highest and best use. An asset’s value includes all transportation, labor and material costs to place the asset into use.
Fair Market Value (2) – FMV – In Place (not in use): The most probable market price expressed in terms of cash equivalents, an asset should bring in a competitive and open market under a reasonable time period, at the assets’ highest and best use. An asset, not in operation, but is capable of being moved and placed into service (does not include transportation, labor or material costs to place asset into use).
Orderly Liquidation Value (OLV): The most probable market price expressed in terms of cash equivalents, an asset should bring held under an orderly sale condition (as is and removed), given a reasonable period of time to find a hypothetical buyer.
Forced Liquidation Value (FLV): The most probable market price expressed in terms of cash equivalents, an asset should bring conducted under conditions of limited exposure time and similar to public auction conditions (i.e. highest bidder).
Types of Machinery and Equipment Appraisal Reports
Summary Appraisal Reports typically include an onsite inspection by the appraiser or field representative to document specific information regarding the machinery or equipment, including but not limited to: model numbers, serial numbers, engine size/hours, mileage, upgrades or modifications (if any), date of acquisition and condition. The asset is photographed and assigned an item number for the appraiser’s identification. The report details major equipment with related picture for easy reference.
Desktop Appraisal Reports are performed without an onsite inspection of the asset by the appraiser. We provide the client with an equipment documentation form to complete and return to us. Clients are responsible for collecting all physical data, report current conditions and supply us with digital photographs. National Business Valuation Services relies upon the detailed description provided by the client to form an opinion of value. Desktop appraisals are brief in nature. Photographs may not be included in the report; however they are kept in the appraiser’s file. Major equipment items are itemized in the report and other assets are grouped by lot(s) (bulk value) and documented as aggregate values.
National Business Valuation Services, Inc., Brian Wendler and their work product comply with IRS definitions for “qualified appraisers and appraisals” as outlined in the Pension Protection Act of 2006. Certified Machinery & Equipment Appraisals are prepared to the rules and standards of the Uniform Standards of Professional Appraisal Practice (USPAP).