In normal circumstances, ICS’s machinery & equipment (M&E) team prefers getting up close and personal with the assets they value.
This approach is challenging due to restrictions on travel and personal contact implemented as a result of the coronavirus pandemic.
By leveraging technology tools and strong partnerships with clients, M&E appraisers are quickly adapting to get the job done.
More so than in any other practice, our team members enjoy rolling up our sleeves and getting our hands dirty. Unlike many of our colleagues who spend their days evaluating paper assets like customer contracts, software licenses, and private loan agreements, or intangible assets like goodwill, we often visit factory floors, chemical plants, and restaurant kitchens to inspect equipment, review hard-copy usage records, and talk with the individuals who operate and maintain it.
For the time being, at least, that hands-on approach is going to have to change.
Even if we could get to the sites with the travel restrictions and taboos brought about by the coronavirus, the facilities might be temporarily closed. It’s unfortunate because these visits can be beneficial, especially in situations where there is a long file of historical valuations and restatements of book values on machinery and equipment that needs to be sorted out to pass muster with auditors.
The challenge is surmountable. It’s just going to require a bit more time, creativity, and client input than before.
The time and the client input component are related. We may need to lean a little harder on clients to help us compile maintenance logs, reconstruct fixed asset records, chase down the foreman to get a question answered, or go down to the shop floor and see whether that 1960 coal-powered furnace that’s on the books is really still there. All of that might take a bit more time, but because we are all on the same team—most of the work we do is associated with calculating purchase price allocations in the context of M&A deals—we will get through it together.
COVID-19 Drone Technology will likely involve greater use of technological tools, some we were already making extensive use of such as digital photos, and others we are taking another look at such as live virtual video inspections—” Hang on, can you please pan back to that compressor to your left…”—and possibly even drones or robotics.
The impact of the pandemic is going to be felt in every corner of our lives, including M&E valuation. We are confident that with a little creativity on our part and a lot of partnership with our clients, we will continue delivering the sound, high-quality valuation work the market has come to expect. For more information about how ICS Asset Management Services can meet your financial reporting requirements, including valuations of your tangible assets—even from a distance—we invite you to contact us at 800-536-7376.