What should you expect when you need to know what the equipment is worth? What goes into a Certified Appraisal Report?
A USPAP (Uniform Standards of Professional Appraisal Practice) compliant report mandates specific information about the subject property in order to withstand scrutiny by the IRS, lenders, courts, attorneys, CPAs and others.
The Certified Machinery and Equipment Appraisal Report prepared by Analytic Business Appraisers will contain substantiated, irrefutable, defensible information you can rely upon.
- Summary of Facts
- Scope of Work
- Degree to Which the Property is Inspected or Identified
- Extent of Research Into the Physical or Economic Factors that Could Affect the Property
- Extent of Data Research
- Type and Extent of Analysis Applied in Arriving at Opinions or Conclusions
- Depth of On-Site Inspection
- Overall Condition of Equipment
- Intended Use
- Economic Conditions
- Definitions of Conditions
- Methods of Evaluations
- Sources Contacted
- Market Conditions
- Final Value Summary and Reconciliation
- Appraiser’s Certifications and Qualifications
- Photographs (included in Summary Appraisal Reports)
Elements Of The U.S. Small Business Administration’s Standard Operating Procedures (SOP’s) 50 10 5 (D) Stated In Short Below…
A Certified Machinery & Equipment Appraiser must be independent and have no appearance of a conflict of interest (such as direct or indirect financial or other interest in the property or transaction) and issue a USPAP compliant appraisal.
In order for the appraiser to identify the scope of work appropriately, the appraisal must be requested by, and prepared for, the lender. The cost may be passed on to the Small Business Applicant.
For loans greater than $350,000, the lender must obtain an independent business valuation from a qualified source. Analytic Business Appraisers is your “qualified source”.
The lender’s Credit Memorandum for Tier 3 loans must include (at a minimum) the items required for Tier 1 and Tier 2 loans plus the following:
Change of Ownership:
For a change of ownership, a business valuation that supports the purchase price based on generally accepted valuation methods used for the industry in which the business operates.
Assets Other Than Cash:
Lenders must carefully evaluate the value of assets other than cash that are injected by owners or principals. Therefore, an appraisal or other valuation by an independent third party is recommended.
Other Fixed Assets:
If the valuation of fixed assets is greater than their depreciated value, an independent appraisal must be obtained to support the higher valuation.
There are many reasons a business owner, CPA, attorney, insurance underwriter, lenders, leasing agents, business brokers, farm credit managers and others absolutely require the professional expertise of Analytic Business Appraisers, an independent third party Certified Machinery and Equipment Appraiser.
- Buy / Sell Agreements
- Converting From C To S-Corp
- Loans / Financing
- Insurable Value
- Tax Purposes
- Estate Planning
- Bankruptcy / Insolvency
- Divorce Settlements
- Mergers & Acquisitions
- Litigation Support
- Trust Planning
- Sarbanes Oxley
- Partnership Dissolution
- Gift Estate Planning
- 1031 Exchanges
- Retirement Planning
- FASB 141 & 142
- GASB 34
Can you really rely on a guess, book value, the word of a non-certified person, or dealer who may have a “hidden agenda”? The answer is “NO”. You cannot. Why not? Relying on a guess, book value, auctioneer or the word of a non-certified person is inaccurate and will not withstand scrutiny.
There are 2 types of Certified Machinery & Equipment Appraisal Reports:
Summary Appraisal Reports
In a Summary Appraisal Report the appraiser provides an on-site inspection of the machinery/equipment to be appraised. The inspection includes the collection and documentation of specific information including condition, serial and model numbers, hours/mileage, etc. The appraiser will number and photograph each item being appraised and include the photographs in the final report.
Desktop Appraisal Reports
In a desktop appraisal report, the client provides Analytic Business Appraisers with the pertinent data required for the report, including photographs. There is no on-site inspection by the appraiser. Analytic Business Appraisers provides the forms for the client to complete and return to us. From the information provided by the client, we then compile and complete the desktop appraisal. This type of appraisal report is less detailed than the Summary Appraisal Report.