Over the last 3 decades, Equipment Appraisers has developed thorough research methodology that can be relied upon to produce accurate, timely and provable results.
Multi-pronged analytical process
Engagement Process
At Equipment Appraisers we employ a detailed methodology developed at the Kohli Group for over 20 years. This methodology consistently results in accurate, timely and cost effective conclusions of value:
1. Identify type and scope of Assignment
After receiving an assignment request by the client, consultant or financial institution, questions such as the nature of the assignment, the intended use, the fee structure and the particular assets or inventory to be appraised are answered before moving forward.
Once this is established, the engagement is established and can move forward.
2. Gathering Data (Due Diligence)
Whether we are to appraise assets or inventory, Kohli Appraisers understands the background of the company, the nature of the industry and other key factors by interviewing the key management, and references current industry sources.
3: Physical Inspection
In virtually all fixed asset appraisals, an onsite inspection of the assets (machinery & equipment, furniture, fixtures, leaseholds and inventory) is the basis to determine condition, age, obsolescence and other factors that could affect the value.
The inspection includes a description of the assets, a taking of important details such as models and serial numbers, digital photographs or videos of the assets at the site and any other important details that affect value.
4. Analysis
Upon completion of the inspection, our appraisal and research team start applying different analytical methods in order to come to a value conclusion. Based on the nature of the assets, and the intended use of the appraisal, different methods are employed. For example, if a going concern value of a plant is required, we may employ the cost approach to determine the value of this plant after obsolescence along with individual valuations of different movable equipment (transportation and construction). Next, this is compared to similar sales of other plants (adjusted for capacity, obsolescence, age, condition and nature of the transaction) to verify the conclusions. This detailed, multi-pronged approach allows for an accurate value that has been derived by experts with a wealth of experience, skill and expertise.
5. Review and Finished Report
All appraisal assignments are reviewed and tested by senior appraisers to ensure the correctness of the approach, the utilization to all relevant data and validity of the assumptions made. Finally, the finished appraisal is produced and delivered to the client in their preferred method (email / fax / printed / cd-rom). All our appraisals conform to USPAP (The Uniform Standards of Professional Appraisal Practice).
Types of Value
Approaches to Value
Equipment Appraisers applies three main approaches to value. In the valuation process, all approaches are considered, and usually, one or two are applied (depending on the asset). This guarantees a well researched, documented approach to value that could be relied upon by all intended users.
Sales / Market Approach
Values can be estimated by comparing the subject with similar items that have recently sold or are currently offered for sale in the marketplace. Within these items, factors such as capacity, age, location, date of sale, are all adjusted towards the subject property inorder to arrive at a reasonable value. This approach is the preferred when many sales of like items have occurred in the marketplace as all factors of depreciation have been included in those prices.
Cost Approach
This is an estimate of present replacement cost of the subject less all accrued depreciation. Depreciation includes loss in value due to physical deterioration, functional and economic obsolescence. This approach must be performed by a knowledgeable appraiser as he is predicting adjustments made by the marketplace. This approach is employed when sales data is not available for like items. This is usually the preferred approach to value plants, specialized machinery and equipment, and software.
Income Approach
This is an application of the capitalization of the future income the item will produce. In order to apply this approach, a clear indication of the income from the asset is required along with all the support equipment and other costs incurred. This approach is used once sales comparison is not available and it is more appropriate than applying the cost approach. Typical uses are for rental equipment (construction, transportation), Patents and certain software applications.
Research
Research is the primary component of all our valuations. For a typical engagement, we spend an average of 3 days to 1 when comparing research to the actual site inspection. As a company, we spend hundreds of man hours a year to add to our database of comparables and other research which directly impacts our valuation process. We have a comprehensive inhouse tool to help our appraisers’ value assets called the Asset Valuation Engine (ASE). This tool is constantly maintained and inputted with comparables sales of assets from auctions and brokers throughout North America.
Here is a list of tools and sources we utilize to help derive our conclusions:
- Asset Valuation Engine
- Auctions
- Internet Sales
- Broker Data
- Trade Journals
- Price Lists
- Manufacturers
- Used Dealers
NOTE: Make a diagram showing the following:
Approaches to Value
Sales / Market Approach
Values can be estimated by comparing the subject with similar items that have recently sold or are currently offered for sale in the marketplace. Within these items, factors such as capacity, age, location, date of sale, are all adjusted towards the subject property inorder to arrive at a reasonable value. This approach is the preferred when many sales of like items have occurred in the marketplace as all factors of depreciation have been included in those prices.
Cost Approach
This is an estimate of present replacement cost of the subject less all accrued depreciation. Depreciation includes loss in value due to physical deterioration, functional and economic obsolescence. This approach must be performed by a knowledgeable appraiser as he is predicting adjustments made by the marketplace. This approach is employed when sales data is not available for like items. This is usually the preferred approach to value plants, specialized machinery and equipment, and software.
Income Approach
This is an application of the capitalization of the future income the item will produce. In order to apply this approach, a clear indication of the income from the asset is required along with all the support equipment and other costs incurred. This approach is used once sales comparison is not available and it is more appropriate than applying the cost approach. Typical uses are for rental equipment (construction, transportation), Patents and certain software applications.
Research
Research is the primary component of all our valuations. For a typical engagement, we spend an average of 3 days to 1 when comparing research to the actual site inspection. As a company, we spend hundreds of man hours a year to add to our database of comparables and other research which directly impacts our valuation process. We have a comprehensive inhouse tool to help our appraisers’ value assets called the Asset Valuation Engine (ASE). This tool is constantly maintained and inputted with comparables sales of assets from auctions and brokers throughout North America.
Here is a list of tools and sources we utilize to help derive our conclusions:
- Asset Valuation Engine
- Auctions
- Internet Sales
- Broker Data
- Trade Journals
- Price Lists
- Manufacturers
- Used Dealers
Research
Research is the primary component of all our valuations. For a typical engagement, we spend an average of 3 days to 1 when comparing research to the actual site inspection. As a company, we spend hundreds of man hours a year to add to our database of comparables and other research which directly impacts our valuation process. We have a comprehensive inhouse tool to help our appraisers’ value assets called the Asset Valuation Engine (ASE). This tool is constantly maintained and inputted with comparables sales of assets from auctions and brokers throughout North America.
Here is a list of tools and sources we utilize to help derive our conclusions:
- Asset Valuation Engine
- Auctions
- Internet Sales
- Broker Data
- Trade Journals
- Price Lists
- Manufacturers
- Used Dealers