The Ultimate Guide to Machinery and Equipment Valuation
We’ll show you why machinery and equipment valuations are important, cover the terminology you will encounter, and offer advice to make sure you choose the right California equipment appraiser for your circumstances.
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Machinery and Equipment Appraisal
A Certified Machinery and Equipment appraisal is a critical component in the operation of a business. It helps business owners ensure they receive a fair price when purchasing and selling individual assets as well as when selling their entire company.
It also ensures accuracy during litigation, helps insurance companies when an insurance claim is made, and supports IRS and State of California tax disputes.
Although anyone can try to perform an equipment valuation, it’s in a business owners best interest to hire a Certified Machinery and Equipment Appraiser as the report is from a third party and written to meet court of law requirements in case the matter goes before a judge and/or jury.
Machinery & Equipment Valuation: What Is It and Why Do You Need One?
Asset valuation involves determining the Fair Market Value of an asset or set of assets. Asset valuation typically utilizes both subjective and objective measurements. Almost any business, whether large or small, requires an asset valuation at least once during the company’s lifespan.
Certified Machinery and Equipment Appraiser’s Role
Certified Machinery and Equipment Appraisers (CMEAs) perform asset valuations for Machinery and Equipment. The types of equipment CMEAs evaluate ranges across companies.
It’s critical that you hire a person with the proper CMEA certification to appraise your assets. Such individuals undergo a rigorous written examination, have been evaluated by a Peer Review Committee, attend a yearly refresher course, and uphold ethics according to the Uniform Standards of Professional Appraisal Practice (USPAP.)
Should you hire someone who doesn’t have their proper certification, you risk that person having a hidden agenda. Your valuation is also unlikely to withstand scrutiny if issues arise.
Choosing to do your own equipment valuation can be equally risky. Trying to guess or use the book value of your equipment often results in over or undervaluation. If, for example, the IRS or your insurance company questions your valuation numbers, you could find yourself in a lot of trouble.
All evaluations performed by a Certified Machinery and Equipment Appraisers are independent and unbiased. This means that your appraiser is responsible for advocating for the appraisal itself and not for you or your business.
People have many reasons for needing machinery appraisal. However, regardless of the reasoning, undergoing a Certified Equipment Appraisal is a formal process.
When your machinery and equipment undergo valuation, you’ll likely encounter many valuations terms and jargon when speaking with your Certified Machinery and Equipment Appraiser. Make sure you ask questions and are comfortable with the work you are requiring to be done.
Once your equipment valuation is complete, you’ll receive two documents from your certified equipment appraiser: the initial Engagement Agreement and a Summary Appraisal. These documents will confirm the type of valuation method(s) and Scope Of Work (SOW).
Importance of Equipment Appraisal
Receiving an equipment appraisal is vital to protect you from individuals or companies trying to take question the value of your assets. Even at the end of your equipment’s lifespan, there’s typically some value.
Equipment valuations are also important if you plan on purchasing new equipment. The valuation offers insight on depreciation expenses, which you can claim on your taxes.
While it’s possible to run rough equipment valuation estimations using online calculators, they’re only somewhat accurate at best. Given the tax-saving benefits that certified equipment appraisers can have on a company, it’s often in a business’ best financial interest to hire a professional.
There are many reasons people hire an equipment appraiser to put together an equipment valuation, and appraisals can range from Fair Market Value in place and in use to Orderly Liquidation Value (OLV) to Forced Liquidation Value (FLV). People ranging from business owners to attorneys to farm credit managers to leasing agents almost always require the support of an appraiser at some point during their career.
Examples of why people need machinery and equipment valuations to include:
- Buying or selling equipment. Fair Market Value is used to determine a fair price between two agreeing parties. Orderly Liquidation Value occurs when the owner is winding down the operation of their business while Forced Liquidation Value often occurs if bankruptcy is involved.
- Insurance. Knowing your equipment's value is critical for ensuring you have the right policy to cover your assets. Equipment valuations are also commonly used if you need to file an insurance claim.
- Continued use. Continued use means that the asset is in normal use and operation and is working as the manufacturer of the item intended. It may mean you have no intention to sell your machinery and equipment but it also may mean you are willing to sell it if the price is right. Even so, you need to know its value for purposes such as financial reporting or if you want to use it as security for financing.
When it comes to business owners, receiving an equipment valuation helps them buy, sell, or grow their business. On the other hand, professionals like attorneys and lenders need to receive equipment valuations from their clients to make financial decisions on their behalf and ensure that the values are realistic, should the IRS perform an audit.
The three examples above are just a few of the many reasons why people hire certified equipment appraisers, and we’ll be covering more examples shortly.
What is an Equipment Appraisal?
An equipment appraisal is an in-depth analysis performed by a Certified Machinery and Equipment Appraiser (CMEA). It’s entirely unbiased towards an individual or business, focusing instead on ensuring the appraisal is accurate and defensible in case there is a dispute.
Equipment appraisals offer valuable insight for business owners on items such as:
- Financial standing
- Tax deduction opportunities
- The amount of financing they’re eligible to receive
- Whether or not they have enough insurance to protect their equipment
- A fair price to buy or sell a piece of equipment or company
While CMEAs are responsible for upholding high work integrity, equipment appraisals can’t be guaranteed or, in certain cases, always proven.
Often, business owners choose to adjust the CMEA’s value of a given asset, as buyers and sellers have intangible influences such as sentiment, politics, familiarity, or lack of understanding of a given piece of equipment.
The purpose of an equipment appraisal is to serve as a base for negotiations between two parties, using as much substantial data as possible determined during the appraisal process.
An appraiser begins their work by studying and implementing a program to gather, observe, and analyze data of the given equipment and machinery.
Often, an equipment appraiser will utilize more than one approach during their analysis to ensure a thorough and unbiased review of the machinery. Once they’ve completed this process, they draw a conclusion that includes either an estimate of equipment value or a range where the value could fall.
The equipment appraisal ends with formal documents detailing the process and conclusion.
While certified equipment appraisers do their best to make consistent and sound judgments, it’s important to note that values may fluctuate if you hire more than one appraiser. Skill, experience, and judgment are all external factors that help an equipment appraiser arrive at their chosen conclusion.
How Do You Determine the Value of Used Equipment?
There are three main methods that Certified Machinery and Equipment Appraisers (CMEA) use
when determining the value of used equipment. They include:
- Sales comparison method
- Cost method
- Income method
These same methods are applicable for new equipment as well. We’ll cover these methods in greater detail later in this guide. So, for now, we’ll talk about these methods as they relate to used equipment pricing guide.
Sales Comparison Method
CMEAs use the sales comparison method to assess market data sources. When it comes to used equipment, auction houses and dealers are often a common go-to. By comparing and analyzing the price of used equipment on the market relative to the equipment's condition, age, and estimated number of years left to use, CMEAs can better determine the equipment's appropriate value.
Cost Method
If your equipment isn’t commonly sold on the market, your CMEA may use the cost method. They’ll look at your used equipment’s condition and age, among other factors, to determine its current value based on a depreciating price scale.
Income Method
The income method is ideal for equipment that directly generates revenue. CMEAs look at the value a machine has based on its income production for a business. When it comes to used equipment, they may assess whether or not the equipment’s income earning potential decreases as it ages.
When CMEAs work on determining the value of used equipment, they may combine two or more of the methods listed above to arrive at a more well-rounded assessment.
Individuals who request equipment appraisals have the option to choose from various value levels, depending on their needs. Some of the most common value types include fair market value, fair value, and forced liquidation value. We’ll be covering what these valuations, and many others, entail shortly.
What’s the Purpose of An Equipment Valuation?
There are three primary reasons people opt for an equipment valuation. They include:
- Buying or selling equipment
- Insurance
- Continued use
Let’s take a closer look at the advantages of getting an equipment valuation for each of these categories.
01 Buying or Selling Equipment
If you’re buying expensive equipment, you’ll want to know that you’re getting the best possible value, particularly if the equipment you’re purchasing is used. For this reason, many buyers choose to hire a CMEA so that they prevent the possibility of spending more money than they should on machinery.
Similarly, if you’re selling your equipment, getting an equipment valuation is paramount to ensuring that the price point you set is lucrative while still being attractive to buyers.
02 Insurance
If you plan to purchase insurance on your equipment, the insurance company will request an accurate valuation of your assets to determine your premium. That way, you’ll be protected in the event of an accident, litigation, or loss. When determining equipment valuation for an insurance company, your CMEA will likely utilize different valuation methods to determine the value of the equipment.
03 Continued Use
Requesting an equipment valuation on your current assets when you have no intention to sell them is valuable for property tax assessments. Since these assessments rely on current values, occasional equipment valuations offer companies the opportunity to potentially reduce their tax bill by taking advantage of depreciation write-offs.
Why Should You Perform a Certified Equipment Appraisal?
People have various motivations for wanting to get a certified equipment appraisal. We’ll cover fourteen of the most common reasons here.
Mergers & Acquisitions
Equipment appraisals justify the asking price or offer for a business. Additionally, some buyers will want to attain a business acquisition loan. In this case, lenders will request equipment appraisals for collateral reasons. Buyers will also benefit from being able to immediately determine their asset list and depreciation schedule when they acquire their new company.
Litigation Support
If you want to file a lawsuit or a lawsuit is filed against you, having an equipment appraisal is invaluable in court. The equipment valuation serves to establish authority from an expert who has an unbiased perspective on the situation.
Divorce
Hiring a CMEA to perform an equipment valuation before you get divorced will make the divorce process smoother and fairer. Using the valuation, the judge will decide how much money your spouse is legally entitled to.
Buy-Out Agreements
An equipment valuation should always accompany buy-out agreements. By doing so, both parties will understand the cost of buying out their partner without emotions sidetracking their motivation.
Estate Settlements
Settling an estate can be a grueling process involving disputes between family members, debts needing to be paid, and distributing inheritances. An equipment valuation, clearly showcasing depreciation, will lessen the stress and ensure assets are divided fairly.
Employee Stock Ownership Programs (ESOP)
Employee Stock Ownership Programs (ESOP) offer employees the option to be shareholders in a company. Equipment valuations are critical for ESOPs because they highlight the current value of tangible assets instead of using the book value as support in determining the share price and plan.
Loans/Financing
If you want to take out credit, hiring a CMEA to perform an equipment valuation will speed up the loan process and help you maximize the finance amount you’re eligible to receive. An equipment appraisal will also highlight if there are any current loans and liens. That way, lenders receive a better understanding of your company’s true equity.
Partnership Dissolution
When it comes to partnership dissolution, often people are focused on maximizing their asset gains at the expense of their former partners. By getting an equipment valuation, you ensure that the depreciation rate doesn’t overvalue or undervalue your assets.
Foreclosures
Equipment valuations help determine the price point of a home. Foreclosures don’t typically represent Fair Market Value (FMV), and therefore the CMEAs need to examine other factors. However, if there are many foreclosures in a given area, these valuations carry a little less weight since the foreclosure prices collectively help determine the market value.
Retirement Planning
Many people choose to sell their business before retiring. Equipment valuations will help these individuals understand the current and potential future value of their assets. Retirement planning valuations help people determine the point at which they'll earn enough money from selling their business to retire. For this reason, these valuations are helpful to do years before the desired retirement date.
Insurance Purposes
It’s easy to under or overpay insurance premiums on your assets without an equipment valuation. The equipment depreciates over time, which can affect your premium. A CMEA will put together the documentation you’ll need to show your insurance agency to ensure they’re giving you the best-fit insurance policy and rate possible.
Trust Planning
Including your equipment assets in a trust is good business. Having an equipment appraisal will aid with defending the values, managing taxes and ensure clarity if there are multiple trustees. Smaller pieces of equipment may be lumped together in a equipment valuation for the trust, whereas larger items will stand on their own.
“C” Corp. to S Corp.
Converting your corporation from “C” Corp. to “S” Corp. is an excellent way to reduce your taxable income. During this process, you’ll be asked to list your asset values. Having a professional CMEA do this for you will ensure you’re providing the most accurate numbers possible.
Business Liquidation
Knowing your equipment's value is critical during business liquidation since it can help you determine a price to sell. Therefore, it may give you more quick access to cash than if you try pricing the equipment without a professional. It can also offer additional financial support during the sale process.
Free Equipment Appraisal Sample
This is a free sample Equipment Appraisal including a Scope Of Work.
Why hire a Certified Machinery and Equipment Appraisal Professional?
Hiring a Certified Machinery and Equipment Appraiser (CMEA) will provide you with a third party or an unbiased opinion on the value of your machinery and equipment. Embracing their education and experience, CMEAs offer a well-rounded approach to appraising assets, ensuring that you maximize your desired benefits from the valuation.
Unlike many auctioneers and dealers, CMEAs don’t have a hidden agenda. Their sole purpose is to offer a valuation on your equipment while upholding the ethical principles enforced by the Uniform Standards of Professional Appraisal Practice (USPAP).
In order for an equipment valuation to be successful, the appraiser performing the task must have a deep understanding of the type of equipment they’re assessing, knowledge of the market for the equipment, and following USPAP requirements to ensure their final report is compliant.
It's critical to hire a CMEA versus an auctioneer, dealer, or another layman to perform your equipment valuation because the IRS and other organizations only view CMEAs as qualified individuals. CMEAs are also the only individuals that can offer documents that uphold in court.
If you are thinking about estimating the valuation of your own equipment, know that this can have devastating consequences if you find yourself in court or the IRS contacts you about a discrepancy. There’s lots of room for error with valuations by people without experience in the field, leading to liability and risk.
By hiring a CMEA professional, you can be sure that the person will be qualified under the following USPAP and CMEA rules:
- Pass a written exam
- Write and present an Appraisal Report to a peer review committee
- Participate in a yearly CMEA refresher course
- Seek out any additional education as it becomes required
- Be an ethically moral professional under the USPAP’s policies
When searching for a CMEA, consider the type of business you run and whether it’s on a local or national scale. Local businesses often receive a greater benefit by hiring a CMEA in their community.
Your local CMEA will have a deeper understanding of equipment value on the local market. Their in-person evaluations ensure that they gain a deep grasp of your machinery's current state during a physical inspection.
At Rogerson Business Services, all Machinery and Equipment appraisals are performed by Andrew Rogerson under his Certified Machinery and Equipment Appraisal (CMEA) designation.
The CMEA designation requires all appraisals to be performed in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) of The Appraisal Foundation. By Andrew working with and complying with industry standards, it ensures that proven peer-reviewed appraisal methods are used to develop defendable opinions of value.
Below are the valuations that Andrew offers:
- Fair market value (FMV)
- Fair Market Value - Removed
- Fair market value—Installed
- Fair market value In Continued Use
- Orderly liquidation value (OLV)
- Forced liquidation value (FLV)
- Salvaged Value
- Insurance cost new
In all cases, Andrew will provide you a CMEA approved Engagement Agreement prior to starting the assignment and a Summary Appraisal at the conclusion of the assignment.
Need help with machinery and equipment appraisal?
Rogerson Business Services (RBS) is an M&A Advisory Firm for lower to middle market businesses built on trust and ethics. Andrew Rogerson, Certified M&A Advisor and CMEA, can help you find answers to all your questions, introduce you to better opportunities, and manage the machinery and equipment valuation process's integrity while keeping every aspect of the appraisal confidential.
Types of Equipment Appraised by Certified Machinery and Equipment Appraisers:
Just about any piece of equipment can be evaluated by a Certified Machinery and Equipment Appraiser. Below are some examples.
When choosing a CMEA, make sure their knowledge and experience match with the type of equipment you own so that you ensure you’re receiving the best possible appraisal.
- Agriculture & Farm Equipment
- Metalworking Equipment
- Chemical Processing Equipment
- Industrial Equipment
- Construction & Heavy Equipment
- Computer & IT Equipment
- Laboratory & Testing Equipment
- Packaging Equipment
- Transportation Equipment
- Oilfield Equipment
- Manufacturing Equipment
- Plastics & Rubber Equipment
- Restaurant Equipment
- Material Handling Equipment
- Printing Equipment
- Woodworking Equipment
- Food Production Equipment
- Medical Equipment
- and others…
Methods of Equipment Appraisal
There are three primary methods of appraising equipment. They include:
- Market Data Approach or Sales comparison method
- Cost method
- Income method
Now we’ll take a closer look at each one.
Market Data Approach or Sales Comparison Method
The Market Data Approach or Sales Comparison Method, examines the estimated price of equipment based on prices paid in actual market transactions and current listings. While the Market Data Approach provides an excellent base for equipment valuations, it isn’t foolproof.
The effectiveness of this technique depends on items such as the time of the sale, whether there were unusual circumstances with the sale, whether the sale data was verified, and just how similar the equipment is to the item it’s being compared to.
If a piece of equipment is no longer on the market and your CMEA can't reach the manufacturer, they will need to run an estimated depreciation analysis. In this case, the appraiser may reach out to distributors and dealers, as they may sell similar equipment and know what the market value estimate should be.
Cost Method
The cost method, also called cost approach analysis, is another strategy CMEAs use to perform equipment appraisals. Focusing on depreciation, the cost method estimates the value of equipment by estimating the cost of equipment improvements and subtracting that from the estimated depreciation.
The formula CMEAs use for the cost method involves dividing the remaining life by the normal life and multiplying that by the cost new to arrive at the fair market value.
Income Method
Instead of determining the value of a piece of equipment itself, the income method considers how much revenue any particular machine generates. An example of a useful place to apply the income method is when appraising an aircraft.
Typically, the income method is the least used of these three options since it can be difficult to gather accurate data regarding income and expenses for a piece of equipment.
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How to Determine the Fair Market Value of Machinery
The Fair Market Value of machinery is the price at which a CMEA determines that the item will sell well on an open market. It’s considered a fair sale price, where the seller and buyer both feel that they’re receiving a price in their best interests.
When determining the fair market value, there are five classifications your machinery can fall under. Let’s take a look at each one.
Very Good (VG)
Machinery that doesn’t require repairs or unusual maintenance at the moment or in the foreseeable future. The equipment is in excellent condition and is operating at its highest potential.
Good Condition (GC)
Machinery that has some use and has parts that underwent modification or repairs in order to be utilized to nearly its full potential. Age and/or the amount of use may impact the machinery’s ability to perform as it did when it was brand new.
Fair Condition (FC)
Machinery that operates at reduced capacity as a result of age and/or application. The machine is expected to need basic repairs and replacements in the near future to continue operating according to its original specifications.
Poor Condition (PC)
Machinery that does not fully perform its intended functions. Major repairs or replacements are needed in the immediate future for it to return to a state of functioning to its specified utilization.
Scrap Condition (X)
Machinery that will not operate to its expected function regardless of the number of repairs or modifications made. Scrap classified machinery either is useless due to a fulfilled lifespan or because it wasn’t ever technologically or functionally feasible.
M&A LOWER MIDDLE MARKET ADVISORY
Why Work With Rogerson Business Services?
Business Valuation
Many sellers neglect the business valuation and methodology early in the process, only to become frustrated after the deal has been finalized. Rogerson Business Services can help you understand the value of your business based on different methodologies.
Legal Due Diligence
When selling a business, the legal standing of the business determines the smoothness, efficiency, and speed at which the transaction is finalized. M&A Advisors offer a sell-side M&A process backed by the viability of a California Licensed business or transaction attorney. With a licensed California M&A Advisor, you can be certain the legal documents involved in the sell-side M&A process is detailed and accurate.
Business Analysis
To avoid wasting time with unqualified buyers, get help from a trusted, licensed, and accredited California M&A Advisor. An M&A Advisor will vet potential buyers to make sure they're legitimate and are serious about purchasing your business. An M&A Advisor knows the ins and outs of selling a lower middle market business and can also help you get your business in shape to get you the best deal.
Financial Due Diligence
Our service includes deal team professionals to assist you. From financial to legal documents to tax and procedures, we want to make sure you are covered.
If you have your own in-house team of advisors, Rogerson Business Services can help make the M&A sell-side process as easy as possible by offering insights that help the team understand and are in alignment with the same goals as yours.
Definitive Purchase Agreement
The Definitive Purchase Agreement is usually extremely complex. It is easy to overlook all the terms and legal jargon, but every paragraph is important and duly considered. It is therefore critical to ask questions and ensure you are comfortable with the final set of legal documents you need to sign.
M&A Sell-Side Targeting
Rogerson Business Services provide Mergers & Acquisition M&A Sell-Side Advisory. We zero target off-market, accretive, private equity and strategic buyers with an interest in lower to middle market companies or businesses to maximize incremental growth value.
Other Fair Market Value Considerations
In addition to classifying machinery according to the categories listed above, some additional factors may determine its fair market value. Below are five examples that can affect the fair market value of the equipment.
Machinery’s Title
If the title of a piece of equipment is unknown or doesn't belong to the current owner, it could impact the equipment's valuation.
Measurable Marketplace
There are different levels of trade, depending on the piece of equipment. Each level could have its own market value. Typically, CMEAs base their valuations on similar products and services from companies with machinery similar to what they’re assessing.
Market Condition
External economic factors can impact a valuation. For example, a booming economy, a recession, and interest rates rising or falling are all circumstances that can impact the fair market value.
Estimated Marketing Time
The amount of time a piece of equipment spends on the market and how well exposed that piece of equipment is to potential buyers can influence the valuation. The CMEA should indicate how long they expect it to take for an asset to sell, provided that selling it is your goal.
Extraordinary Assumptions and Hypothetical Conditions
Since equipment valuations are dependent on the educated opinions of CMEAs, they may derive their valuation from certain assumptions. For example, it’s assumed that there aren’t defects indiscernible to the naked eye, which could affect an asset’s value.
Furthermore, CMEAs reserve the right to adjust the value estimate in a report if new information arises regarding a change in the estimated value of any particular part of the piece of equipment as a whole.
Need help with machinery and equipment appraisal?
Rogerson Business Services (RBS) is an M&A Advisory Firm for lower to middle market businesses built on trust and ethics. Andrew Rogerson, Certified M&A Advisor and CMEA, can help you find answers to all your questions, introduce you to better opportunities, and manage the machinery and equipment valuation process's integrity while keeping every aspect of the appraisal confidential.
Equipment Valuation Calculator
A quick search online will reveal dozens of equipment valuation calculators. While these calculators are a great place to start, they’re not foolproof. A major reason for this is because the physical condition of equipment influences its value.
Another factor that influences your equipment's value is how frequently you use the machinery and how often you perform routine maintenance. Machinery that undergoes light use and/or route maintenance will have a different valuation than machinery that doesn’t.
When it comes to understanding a machine’s condition and how it impacts its valuation, CMEAs with experience in your equipment’s field are your best option. Using market analysis and physical inspections, they’ll run a calculation that may look as follows:
Fair Market Value = Remaining Life ÷ Normal Life x Cost New
That being said, if you choose to start your equipment valuation with an online calculator, you’ll want to have some statistics on hand, such as the original cost of the machinery, the number of years you expect it to serve you for, and the estimated price of its residual value when it’ll no longer serve you.
Machinery and Equipment Appraisal
Now that we’ve covered how to determine the fair market value of machinery, below are five common types of machinery and equipment appraisals:
- Medical Equipment Appraisal
- Farm Equipment Appraisal
- Restaurant Equipment Appraisal
- Used Equipment Appraisal
Construction Equipment Appraisal
In addition to machinery and equipment appraisals, the following construction equipment appraisals are also common:
- Heavy equipment appraisal
- Heavy equipment valuation guide
Equipment Appraisal Services
If you’re ready to get an equipment valuation from Rogerson Business Services, Andrew Rogerson is on standby to help. As a CMEA, Andrew can provide you with a third-party independent assessment of the following items:
- Fixtures
- Furniture
- Equipment
- Any other hard assets needing an appraisal
Whether you need the Fair Market Value of your assets to a Salvage Value to anything in between, Andrew is experienced in preparing the documentation you need.
Speaking of documentation, you’ll receive a USPAP-compliant appraisal, which ensures your valuation complies with industry standards. Proven peer-reviewed appraisal methods showcase defendable opinions of value that will be accepted in court and other legal matters.
Need help with machinery and equipment appraisal?
Rogerson Business Services (RBS) is an M&A Advisory Firm for lower to middle market businesses built on trust and ethics. Andrew Rogerson, Certified M&A Advisor and CMEA, can help you find answers to all your questions, introduce you to better opportunities, and manage the machinery and equipment valuation process's integrity while keeping every aspect of the appraisal confidential.
Types of Certified Equipment Appraisal Reports
FAQ's Frequently asked questions
Desktop Report
Summary Appraisal Report
Ten Reasons to Conduct Machinery and Equipment Appraisal with
Rogerson Business Services
1. Ethics
Rogerson Business Services are members of the M&A Source, International Business Brokers Association (IBBA) and California Association of Business Brokers (CABB) and adhere to their code of ethics.
2. Confidentiality
Rogerson Business Services assists you professionally in a highly confidential manner to protect your personal and financial details.
3. Vetted businesses for sale
Maximizing business owner value among strategic buyers. We keep things confidential during the deal origination outreach program. We are keen to protect your privacy as a business owner.
4. Facilitator
Rogerson Business Services are specialists in business transitions and understand the need to respect all parties in the transaction. There are many steps to value and buy a business. Rogerson Business Services have successfully navigated these steps many, many times.
5. Valuation
Rogerson Business Services can provide you an opinion of value of a business you wish to exit or acquire.
6. Due diligence and escrow
Rogerson Business Services has the knowledge to work through leases, franchise agreements, finance requirements, licensing, California escrow requirement and many other items.
7. Negotiation
Rogerson Business Services practice win/win negotiation skills. Negotiations are rarely perfect and so a win/win approach is the best way forward.
8. Financing and funding
Rogerson Business Services has professional lenders that can assist with finance to successfully buy a business. Also works with M&A sell-side with properly executing a seller financing agreement.
9. Resource
Rogerson Business Services is an active member in the associations of the M&A and Business Broker industry including M&A Source, the International Business Brokers Association, California Association of Business Brokers, International Society of Business Appraisers as well as other professional organizations.
10. Certified Machinery and Equipment Appraisal (CMEA)
The CMEA designation requires all appraisals to be performed in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) of The Appraisal Foundation. By Andrew working with and complying with industry standards, it ensures that proven peer-reviewed appraisal methods are used to develop defendable opinions of value.
Formal Equipment Appraisal Process
Providing you with a Certified Equipment Appraisal is a formal process. That is, it includes a written Engagement Agreement for the appraisal prior to starting any work and it includes the type of valuation method(s) and Scope Of Work.
A sample Engagement Agreement and Summary Appraisal report are available by clicking the links below:
Below are details about what each document entails.
Engagement Agreement
The Engagement Agreement is a document that must be signed by both the client and CMEA before an equipment valuation begins. It outlines the CMEA’s commitment to appraise your assets, payments owed, and timelines. It also confirms whether you’ve chosen to receive a desktop report or a summary appraisal report.
In addition to confirming that your CMEA will prepare the assessment according to the Uniform Standards of Professional Appraisal Practice, the engagement agreement also contains a description of the Scope Of Work.
The Scope Of Work details the type of valuation you select, for example, Fair Market Value.
A critical aspect of the Scope Of Work is to detail the kind of method(s) that will be used for performing the valuation (Income Approach, Cost Approach, and/or Market Data Approach). It explains why your CMEA chose the methods for your particular situation.
The Scope Of Work assures that your CMEA determines their valuation utilizing as many different sources as practical. Examples include consulting with the equipment manufacturer, chatting with brokers of similar equipment, internet research, and speaking with other industry professionals.
In addition to highlighting what the valuation covers, the Scope Of Work also points out areas that are outside the responsibility of the CMEA. For example, inexpensive support items naturally have some value. However, it would be too time-consuming and costly for a CMEA to assess such parts on an individual basis.
Summary Appraisal
The Summary Appraisal is a long-form document that describes the completed equipment valuation in detail. It begins with a piece of general information, reminding the client that the valuation is an opinion that can be substantiated through professional analysis using a vast quantity of data.
After summarizing the salient facts, the Summary Appraisal delves deeper into the Scope Of Work than the engagement agreement. It describes the data research performed, extent of analysis, depth of onsite inspection, and overall equipment condition, among many others.
Other items that make up a summary appraisal document include:
- Definitions pertaining to the valuation
- Details about the methods of evaluation used
- Additional considerations such as current market conditions and extraordinary assumptions
- Capital equipment
- Final value summary
At the end of the appraisal, you’ll find details about your CMEA’s qualifications and a further list of definitions that pertain to USPAP. Your appraiser will also attach photos that they took of your equipment with labels indicating the photo angles; if possible. They’ll also include a statement confirming the valuation they arrived at was from their personal, unbiased analysis and that all reported statements of fact are true and correct.
Using this document, you’ll be able to correspond with lending institutions, courts, attorneys, and business buyers and sellers with confidence.
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We built this amazing "Machinery & Equipment Valuation Guide" - it is yours (free)
Although anyone can try to perform a personal equipment valuation, it’s in a person’s best interest to hire a Certified Machinery and Equipment Appraiser professional. We’ll show you why equipment valuations are important, cover the terminology you’ll encounter, and offer advice to make sure you choose the right appraiser for your circumstances.
Reach out to any of our Deal Team & Advisors for a confidential conversation to see if we are a good fit.
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