The Importance of Machinery and Equipment Appraisals

If you are considering selling your business, or purchasing a new one, a proper appraisal of machinery and equipment is crucial to getting the most return on investment. Accurate machinery and equipment appraisals are often requested to get a full sense of what your business may be worth. If you are ready to take the next step and perform machinery and equipment appraisals, here are a few considerations from the experts at Murphy Business.  

Why Get a Machinery or Equipment Appraisal

As mentioned above, in the event of a formal business valuation, it’s helpful to understand what all aspects of a business may be worth – which includes machinery and equipment. There are many reasons why a machinery or equipment appraisal may be conducted, like:

• Business Mergers and Acquisitions
• Litigation Support
• Divorce
• Buy-Out Agreements
• ESOPs
• Estate Settlements
• Loans and Financing
• Partnership Dissolution
• Foreclosures
• Retirement Planning
• Insurance Purposes
• Trust Planning
• “C” Corp to “S” Corp Conversion
• Business Liquidation

What Happens During an Appraisal?

Now that you understand why a business may require an appraisal, it’s helpful to know what to expect during the actual appraisal process. The purpose of an appraisal is to deliver an independent and unbiased opinion of value for tangible assets, like machinery and equipment. There is usually a specific due date in place to ensure the appraisal is completed in a timely manner. When an equipment and machinery appraiser visits your business to begin the appraisal process, you can expect three steps to happen:

1. The equipment will be identified, so that the appraiser can inspect the piece and compile research. This research can include many factors, like purchase date and price.
2. The appraiser will then apply a method for gathering the value of the piece of equipment or machinery. They can use a sales comparison method, in which the appraiser establishes what the current rate for a piece of equipment is currently worth. Or they can apply a cost approach m method, where the appraiser determines how much it would cost to replace the piece of equipment or machinery, then takes into account the physical and functional adjustments for the current piece. 
3. Lastly, they objectively determine the value of the piece of equipment or machinery. Generally, the appraiser is going to take into consideration the costs that a buyer would incur if he or she were to buy a new piece of the equipment or machinery. After compiling research, they can effectively deliver a value to each piece of machinery or equipment at your business. 

Choose the Experts for Your Machinery and Equipment Appraisal Needs

All Murphy Business machinery and equipment appraisal are performed by certified professional appraisers. Our appraisers are experienced in all aspects of machinery and equipment brokerage. All appraisals are performed in compliance with Uniform Standards of Professional Appraisal Practice (USPAP) of the Appraisal Foundation. Once an appraisal is complete, we can deliver your business a desktop report and/or a summary appraisal report for your records. 

To learn more about our machinery and equipment appraisal services, get in touch with us at Murphy Business today.