Every business owner inevitably encounters the crucial question: What is the true value of your machinery/equipment? Should we obtain a Certified Equipment Appraisal? Book value often falls short of accurately reflecting its worth. Stakeholders seek genuine, substantiated values. Being aware of when this inquiry might arise and understanding what to anticipate can empower a business owner to respond proactively.

When Should a Business Seek Evaluation of its Equipment by a Certified Appraiser?

Businesses have a multitude of reasons to seek machinery/equipment appraisals, exceeding twenty in number. Among the primary motivations are mergers and acquisitions, business valuations, bankruptcy proceedings, and financing including SBA lending, insurance coverage, buy/sell agreements, property tax assessments, and partnership dissolutions. Engaging a certified, reputable appraiser ensures access to trained professionals with the expertise and knowledge required to deliver substantiated values accurately reflecting the equipment’s true worth.

What are the Different Types of Certified Equipment Appraisal Reports?

As per Section 8 of the Uniform Standards of Professional Appraisal Practice (USPAP) for personal property appraisals, two distinct types of written appraisals exist: Appraisal Reports and Restricted Appraisal Reports. A Restricted Appraisal Report pertains to cases where the client and the intended user are identical. However, if the intended user(s) extends beyond the client, per USPAP standards, the appraiser is obligated to utilize the Appraisal Report format. Should anyone other than the appraiser’s client depend on the report, it cannot qualify as a Restricted Appraisal Report.

What is the Time Frame for a Machinery Appraisal?

The duration of the appraisal process hinges on various factors. Primarily, the quantity of equipment being appraised plays a significant role. Assessing machinery in a large factory, which may encompass thousands of pieces, naturally demands more time compared to appraising the equipment in a small restaurant, which might have only a few dozen pieces. Additionally, timing constraints, such as urgency and specific deadlines, influence the appraisal timeline. Moreover, the complexity of the appraisal, including the number of valuation levels required and the rarity of the equipment, also impacts the duration.

How Much is a Certified Equipment Appraisal?

Each appraisal comes with unique demands, and the cost will fluctuate accordingly based on the scope of work involved. Truman Mox can provide you with a free consultation to learn about the process.

What does the Equipment Appraisal Process Consist of?

Anticipate the appraiser to conduct a thorough examination of the equipment, documenting essential details crucial for identification. This typically involves inquiries about the make, model, and serial number of the equipment, its overall condition, maintenance history, including the presence of maintenance records, and any special features or upgrades. Prior to the inspection, appraisers may inform clients of the specific information and documentation required for the process.

After documenting the equipment, the appraiser initiates the research phase, wherein they ascertain the value of the machinery/equipment and subsequently draft and certify the appraisal report.

Must the Equipment Appraiser physically inspect the equipment?

The appraiser isn’t obligated to inspect the equipment in person. Instead, they may rely on another party, such as the client, to furnish the required documentation. This approach, known as a “desktop appraisal,” must be disclosed within the report, including the certification section.

Key Considerations for Business Owners Selecting an Equipment Appraiser

When selecting an appraiser, a company must opt for a “qualified appraiser” as defined by the IRS. Such individuals have obtained an appraisal designation from a reputable professional organization, certifying their competence in property valuation. Moreover, qualified appraisers routinely produce compensated appraisals and possess demonstrable education and experience in valuing the specific type of property under consideration.