At ICS Asset Management Services, we understand the complexities of equipment appraisals. One crucial aspect that often gets overlooked is the concept of value definition. This seemingly simple term can significantly impact the outcome of your appraisal, potentially affecting your business’s financial health. Here’s why understanding value definitions matter in equipment appraisals is critical.

Why Value Matters

Whether you’re refinancing, looking to merge or acquire another company, navigating tax regulations, trading in equipment, or dealing with a business dispute, the purpose of the appraisal dictates the specific type of value needed.

Here’s the trap: If you don’t understand the different value types, the appraisal results might be significantly off the mark. This misunderstanding can have a domino effect on your financial decisions and, ultimately, the success of your business.

The Key Types of Equipment Value

The American Society of Appraisers (ASA) outlines equipment appraisals’ most common value premises. Let’s break down what each one means:

  • Fair Market Value-Installed (FMV-I): This reflects the price a willing buyer would pay to a willing seller for the installed and operational equipment.
  • Fair Market Value (FMV): This is similar to FMV-I but assumes the equipment is disassembled and ready for transport.
  • Orderly Liquidation Value (OLV): This represents the probable selling price of the equipment in a forced sale, but with a reasonable timeframe to find a buyer (think auction, but with a bit more breathing room).
  • Forced Liquidation Value (FLV): This is the fire-sale scenario. It reflects the price you’d likely get if you absolutely had to sell the equipment immediately, with no time to find the best buyer.

The Takeaway

Understanding the different types of value in equipment appraisals empowers you to make informed decisions. At ICS Asset Management Services, our experienced appraisers can help you navigate the valuation process and get an accurate picture of your equipment’s worth tailored to your needs.

Our ASA-certified appraisers of Machinery & Technical Valuations provide certified appraisal services in the areas of construction, heavy machinery, and medical equipment to the small business and SBA financial lending markets. We provide comprehensive asset valuation and portfolio management services, including asset inspections, inventory compilation, and equipment valuation.

Don’t let a misunderstanding about value cost you down the road. Contact ICS to learn more about the different types of “value” used in equipment appraisals. Call (800) 536-7376 to schedule a consultation or submit an inquiry online.