Understanding the true value of machinery and equipment helps business owners by:
- Application for loans or leases. Machine and equipment evaluations are effectively used to secure loans or lines of credit. If accompanied by an independent assessment, it is more likely that loan applications are accepted.
- Reducing personal property taxes by removing assets in the books that no longer exist or deducting assets purchased after expiry of leases. In mergers and acquisition situations, a valuation of machinery and equipment may be useful for structuring the transaction, recapture depreciation and analyzing profits or losses. Business owners who are interested in correct insurance premiums, expand the activities or purchase a business, ask for replacement value and reproduction value, and try to avoid overinsurance or under insurance.
If the claim for damages shows that the value of the insured is lower than the sum insured, your company is over insured. You will cover your loss – but no more. An insurance sum should be set by a reasonable margin to avoid underinsurance, but if there is a significant difference between the sum insured and the value of the insurance, the policyholder incurs an unnecessary premium expense.
If you are underinsured, it means you are at risk of not getting full compensation in case of an insurance event. Your insurance amount is the maximum amount you can get in compensation. In case of an insurance event, what you get paid in compensation is calculated based on your insurance sum. For example, if you have values for more than the sum insured you have chosen, you are underinsured and at a risk of suffering a loss.
In case a company faces a loss or disaster, insurance claims accompanied by specific and detailed information about the condition and value of the asset(s), claims are likely to be met and processed quicker. Some business owners have their machinery and equipment valued and the initial valuation becomes the basis for annual updates.
Ownership and Transition Issues
We provide machinery and equipment valuation reports for ownership agreements for a number of reasons including:
- Partnership dissolution
- Partners are being added to the company
- A business owner is obtaining a divorce
- The business owner is considering retirement
- Formation of a business entity
- Buy / Sell agreements
- Acquisition and Disposition of Used Machinery and Equipment
In addition to helping you determine the right price for equipment purchases and sales, we offer asset re-marketing and sourcing services through our network.