At a certain point in time, almost every business owner will be faced with the question: What is my machinery/equipment really worth? Book value is rarely an accurate representation of what the equipment is really worth. More importantly, inquirers want to know the real value, which is accurate and can be substantiated.
Typically, appraisals are performed because of buy/sell agreements, mergers and acquisitions, business valuations, partnership dissolutions, insurance, bankruptcy, property taxes, financing and Small Business Administration lending. Other reasons would be divorce, estate planning or other estate issues, retirement planning, cost-segregation analysis and litigation support,
All certified commercial appraisals conducted by FF&E Appraisal & Asset Services are in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). Types of value in equipment or inventory appraisals include: fair market value, orderly liquidation value and/or forced liquidation value. Our appraisers can provide you with a certified equipment appraisal report in a timely manner at a competitive cost.
What Should I Look For in an Appraiser?
When searching for an appraiser, only use a ‘qualified appraiser’. This is an individual, as defined by the IRS, who has earned an appraisal designation from a recognized professional organization for demonstrating competency in valuating property. Also, qualified appraisers regularly prepare appraisals for which they are compensated, and demonstrate education and experience in evaluating the type of property being appraised. A certified equipment appraisal, conducted by a professional appraiser, holds up under scrutiny with courts, financial institutions, and lenders.
What Types of Appraisal Reports Are Available?
Summary Appraisal Report: A summary appraisal report is typically utilized for estimating the value of machinery and equipment. On-site inspection details are included in the appraisal report. This USPAP compliant report expresses value as a single figure for each tangible asset valued and the aggregate is reported as a single number.
Desk Top Appraisal Report: A desktop appraisal report is typically used to determine value without the expense of an on-site inspection and detailed analysis of the condition of the machinery or equipment. You send us pictures and a brief description of the machinery or equipment and we provide a value based on this information.
How long does an appraisal take?
Time depends on several factors. First, how much equipment is being appraised? A large factory with thousands of pieces of machinery will take far longer than a small restaurant with only a couple of dozen pieces of equipment.
Other factors that can affect how long the appraisal will take are timing requirements — when do you need it, how many levels of value are being requested, and the type of equipment. Is it rare or can comparable items be easily found?
What will a certified appraisal cost?
Every appraisal has different requirements. The simplest answer is the cost will vary with the scope of work.
What can I expect during the appraisal process?
Expect the appraiser to view the equipment and document any pertinent information that will help to identify the equipment. The appraiser will ask about the make, model and serial number of the equipment, along with its current condition.
Appraisers will also need to know whether the equipment has been properly maintained, if there are maintenance records and if the equipment has any special features or upgrades. Appraisers may let clients know in advance what they will be looking at and any documentation they will need so that it can be available during the inspection.
Once the appraiser has documented the equipment, the research process begins. The appraiser will establish a value for the machinery/equipment and then write and certify the report.
Is the appraiser required to personally view the equipment?
An appraiser does not need to personally view the equipment. The appraiser can rely on another party (including the client) to provide necessary documentation. This is considered a “desktop appraisal,” and the appraiser is required to disclose this within the report and in the report certification.
The appraisal staff of FF&E Appraisals & Asset Services and Jones Swenson Auctions has almost forty years of experience in equipment appraisals. To visit with an appraiser, contact Scott Swenson, CAI, GPPA at Scott@JonesSwenson.com or call (512)261-3838 for non-binding consultation.
