• Commercial Real Estate
• Machinery & Equipment
• Discount Studies
• Special Use Businesses
• Intangible Assets
• Business
• Value Definitions

Machinery & Equipment Valuations

Machinery and Equipment has intrinsic value since they can be created, bought, and used for the purposes of income and profits. Often the value is considered when the machinery and equipment comes as an integrated part of a property. As such, a valuation of machinery and equipment (M&E) is useful for determining purchase price allocations.

Valuing M&E is much different than valuing a business or commercial real estate. The values of M&E depend upon things like liquidation value, going concern value, installation costs, and various others. Generally speaking, the quicker one needs the money, the lower value they are able to collect from the liquidation of their M&E.

Since real estate and business values do not generally include installation costs, it is important that the appraiser is very clear about which value is being used. Many appraisers use what is called “the fair market retail value” where the owner is assumed to have purchased the equipment at liquidation prices.

Just like real estate appraisal, the appraisal of M&E consists of three different approaches:

• The Cost Approach – this approach is based upon the assumption that a purchaser would pay no more for an asset than the cost of creating a substitute with identical utility. This value is considered to be the upper limit. Once a value is obtained, adjustments need to be made by accounting for accumulated depreciation.

• The Sales Approach – This approach is based upon the assumption that the value of the business’ assets can be obtained based upon the transactions of similar items selling in the secondary market. Comparable prices of comparable equipment is collected and then adjusted for differences like age, condition, capacity, location, etc.

• The Income Approach – This approach evaluates the earning capacity of the business assets being valued. This approach however, is rarely used when appraising individual machines and equipment, but rather when analyzing and appraising a production line or an entire production plant.

Calculating depreciation is one of the most crucial elements in conducting a M&E appraisal. There are two main categories of depreciation:

• Physical Incurable Depreciation – Physical depreciation is caused from age, wear and tear, exposure and lack of maintenance. Incurable physical depreciation is depreciation that is non-fixable.

• Physical Curable Depreciation – this type of depreciation is fixable.

The age-life method is the most typical way of calculating the level of incurable depreciation. To do this, the appraiser needs information regarding the economic life, effective age, estimated remaining life, normal useful life, and the chronological age of the M&E. By calculating the amount of depreciation that has occurred, the appraiser can conclude upon a fair value for the M&E.

Frazier Capital Valuation has experience valuing M&E from a variety of different industries. Click here to find out more about conducting an M&E valuation with us.

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Equipment Appraisals

“From CT Scans and MRIs to Bulldozers, Cranes and Rolling Stock, we appraise a wide variety of different types of equipment”

Services

On Site Physical Inspection & Appraisal - the determination of value based upon a physical inspection of the assets in order to determine its operating condition followed by extensive research to the determine the requisite value required.

Desktop Opinions - a hypothetical determination of value based solely upon information provided by the client and conducted without benefit of a physical inspection.

Inventory - the inventory and tagging of all equipment and furnishings and/or selected items. Inventories can involve a wide variety of differing size facilities including business offices, manufacturing plants and even healthcare facilities including hospitals. Simultaneous appraisals of equipment may also be involved.

Lease Review & End of Lease Negotiation - Businesses often acquire equipment on a lease basis. Such leases generally carry a purchase option at lease termination. This option usually stipulates Fair Market Value as the buy-out price. We can assist in the determination of this value and work thru the purchase negotiation.

Personal Property Tax Appeals - in some jurisdictions business equipment is assessed at its market value. Occasionally these assessments do not properly reflect current market value. Usually this is because the taxing authority either is not familiar with or has not physically inspected the equipment. We can determine the market value in accordance with local or state regulations and represent our findings within whatever appeal process is required.

Insurance Premium Valuation - insurance companies will on occasion, request an appraisal, especially of high tech assets, prior to issuing a policy covering the assets in the event of loss or damage. We can provide full appraisal reports in compliance with the stipulations of the policy under consideration.

Insurance Loss Valuation - insurance appraisals are important when natural disasters such as floods, hurricanes, earthquakes, tornados or other sources of damage cause a loss of equipment, supplies or facilities. Insurance replacement costs can be just and fair or not. Our appraisal of the appropriate replacement cost, as defined within the specific policy, insures that our clients receive the full and appropriate value in order to replace those lost items.

Charitable Donations - occasionally businesses and other related organizations donate equipment, new or used. Donors are eligible to receive tax relief for the donation to any non-profit corporation. We provide appraisals that document the value of the donation at the time of bequest.

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Hospital and Medical Equipment

We appraise a wide range of medical equipment from can appraise a single piece of equipment to fully equipped practices, clinics, nursing homes, assisted living facilities and entire hospitals.

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Office and Machinery and Equipment Appraisals

We appraise the entire range of office and commercial equipment.

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Construction and Heavy Equipment Appraisals

We appraise construction and heavy equipment including the following.

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Truck Equipment Appraisals

We appraise a range of various types of truck and rolling stock, including the following: