Here are some of my thoughts on where a company should head in this post recession – pre-normal time frame.

First the negative, if a company has made it this far they have cut, shaved, tweaked, and generally changed their business. They probably have a firm grasp on their financial situation and are currently starting to feel a pinch because their customers are coming back but the lending is still lean and therefore capital for growth is tough to come by. Some businesses have found that in this time frame AR lending / Factoring and paying a lending Broker to find the money is the only way to get the capitol they need to place orders from vendors. Also something to note; several of the smaller Regional or Community Banks are starting to loosen funding quicker than the larger Banks (At least in Small Business Lending).  The obvious problem some of the lenders face is most businesses that have survived are pretty beat up – Sales are Down, AR is dated, and the three year track record is a downward slope. But when you compare that to the businesses that fail I would say that’s a great trade considering the whole Nation and even the World felt the same things.

Second the Positive, due to the fact a company has made it through this Recession they are the last one standing. The Customers have fewer places to buy from and therefore the next few years will have some fantastic growth opportunity for the companies left standing.

Here is the Main Issue;  Most of these companies will try to come back to life and return to business as usual. The problem with that thinking is the rest of the world is in Innovation Mode – they are taking all of the ideas, mistakes, and research and expanding their thinking. Countries Like China and Brazil are in explosive growth and innovation mode and currently America is lagging far behind. I have heard it blamed on everything from Banks, the President, and even 9/11 (10 years of free blame there). The reality is that companies who take this opportunity to innovate will leap ahead of the crowd over the next few years, and the companies who don’t will become dinosaurs.

So, I realize this isn’t your normal light and fluffy blog article – but being in the Machinery Appraisal Industry allows me to see a large expanse of industry and banking situations, and I must say sometimes its very dismal. Rarely do I see a company willing to step outside of its normal thinking and strive to innovate. But when I do see these companies its like a Fireworks Display – Bright and Fantastic.

Nathan Bazzle CMEA – President of Certified Consulting Group [a Nationwide Appraisal Company]

When you engage a CMEA, he or she will typically follow these steps before determining the value of your machinery or equipment: 

• Identify the assets to be appraised
• Define the purpose of the appraisal
• Establish the valuation date for the appraisal
• Determine the appropriate valuation concepts and approaches to be used
• Determine the type of valuation study to be completed
• Select the type of appraisal report to be provided
• Check the availability of data and information

A specific scope of work is a necessary first step in any appraisal. If one doesn’t exist, an appraisal may not stand up to scrutiny in a court of law.

1. Certification – Be sure that the appraiser you choose is a Certified Machinery and Equipment Appraiser (CMEA) – a professional designation for those authorized to prepare and submit an equipment appraisal. Ask for a copy of his/her qualifications and evidence of professionalism and experience in machinery and equipment appraisals. Then you know you’re working with a trained professional. Oftentimes, a non-certified equipment appraisal will not be accepted by governing authorities or withstand scrutiny.

2. Code of Ethics – Your appraiser should comply with the Ethics Rule of the Uniform Standards of Professional Appraisal Practice (USPAP). A CMEA is required to observe a professional code of ethics and comply with regulations mandated by USPAP. CMEAs should promote and preserve the public trust inherent in professional appraisal practice.

3. Certified Machinery and Equipment Appraisal Report – Know what you can expect to see in a qualified equipment appraisal. A CMEA’s comprehensive and detailed appraisal report normally includes photographs, model numbers, serial numbers, and other descriptive information. Values are based on extensive research, personal inspection, and contact with manufacturers and suppliers to determine what machinery and equipment is really worth. A CMEA’s machinery and equipment appraisals are performed to standards set by the requirements of the USPAP, so it can withstand scrutiny by financial institutions, CPAs, courts, and others.

First, as in any equipment appraisal, we’ll need to bring in a Certified Machinery and Equipment Appraiser (CMEA) to be certain that the job is done right. Next, we’ll need to determine the types of things that need to be appraised.

Pretty much any property that belongs to the school can be appraised. That includes things like books, chairs, desks, computers, blackboards, sports equipment, and even the warming trays and heat lamps in the cafeteria. Everything has value, and a CMEA is trained to use a variety of methods to determine that value.

What about equipment that’s been in the school for years? Well, a CMEA can determine the depreciation of that equipment – that is, the value of it now versus the value of it when it was new.

And all the shiny new stuff purchased over the summer? It should be insured against damage or loss, and a CMEA can determine the insurable value for all of it – so that if something unforeseen should happen, the school will be properly compensated.

The reason it’s important to know the value of the school’s machinery and equipment is so that if any of it is sold or traded in at any point, the school will receive a fair price for it.

Marketing and Consultant Services, Inc., located in Wichita, Kansas, is a provider of certified business valuations, certified equipment appraisals, business consulting, mergers and acquisitions (M&A) consulting, and insurance.

Focusing on working with business owners for varied businesses and at all phases of growth, the company also offers business brokerage services, debt restructuring, short- and long-range planning, market surveying, and sales and expense analyses. They also provide referrals and coordination with other business advisors in the legal, accounting, and estate planning fields.

Appraisal Services

Marketing and Consultant Services, Inc. provides certified business valuations and machinery and equipment appraisal services (CMEAs). All of the company’s appraisers are certified in their respective fields; they are skilled, experienced, and knowledgeable in appraisal methodology, exhaustive research, and substantiating a defensible and irrefutable value that will withstand scrutiny.

M&A Consulting Services

Marketing and Consultant Services generally works with buyers who have already found a business to buy, are in negotiations, have completed due diligence, and are in the process of closing of transactions. On the seller side, the company works with business owners who have found buyers and need help to close transactions.

Business Planning and Consulting

Marketing and Consultant Services also offers assistance with business plans, start-up guidance, business enhancement programs, and franchise consulting.

Business and Equipment Sales

They also provide online listings of businesses and equipment that are for sale.

Contact Info

John R. Harris, ASA, MCBC, AM&AA

2014 W. 13th

Wichita, KS  67203

Phone: 316-681-1527

Toll Free: 866-804-0376

Fax: 316-681-3031

That’s the beauty of joining the International Society of Business Analysts (ISBA). The ISBA is made up of a large group of business analysts who specialize in all the different areas of appraisal, including running, appraising, and transferring businesses. You can’t be all things to all people, but by joining a group like the ISBA, you have a group of specialists from which you can draw, and in turn, your business will profit from referrals and referral fees. By becoming a member of the ISBA, you increase your network, increase your knowledge, and increase your profits.

For more information, visit the ISBA website.

Extraordinary assumptions are assumptions directly related to a specific assignment which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of a piece of equipment or machinery, or about conditions external to the equipment, such as market conditions or trends.

Hypothetical assumptions are assumptions that are contrary to what exists but are entertained for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic conditions, or about conditions or facts lying outside the observable scope of discussion or analysis, such as market conditions or trends known to be contrary to known conditions.

The distinction between hypothetical conditions and extraordinary assumptions can carry a legal consequence and are most important in analytical fields where calculations or representations of professional opinions based on such assumptions are communicated by a professional, such as a Certified Machinery & Equipment Appraiser (CMEA), to a client.

You need to make sure that your machinery and equipment appraisal report will hold up under scrutiny. All Machinery and Equipment Appraisal Reports are not created equal. Make sure you have the information you need determine if your equipment appraisal will withstand scrutiny.

It is very important that the appraiser you choose has a professional designation to value your equipment. You can rely with confidence on a trained professional who is experienced in the ethics and reporting guidelines of USPAP. Gone are the days when a non-certified equipment appraisal will be accepted by governing authorities or will withstand scrutiny.

A Certified Machinery and Equipment Appraiser (CMEA) is a professional who has the training, knowledge, experience, and background to render a Certified Machinery and Equipment Appraisal Report. All CMEA professionals receive extensive, continuous training on a monthly basis and are subject to peer review on a regular basis. Only after a professional passes a comprehensive written examination and submits an appraisal that has passed peer review, is he/she awarded the prestigious professional designation of CMEA by the National Equipment & Machinery Brokers Institute (NEBBI). In addition, the professional is required to recertify every five years.

A CMEA is required to observe the highest standards of professional ethics and comply with regulations mandated by the Uniform Standards of Professional Appraisal Practice (USPAP). Only the skills of a CMEA professional make sound financial business sense to determine an accurate value.

Two small Wisconsin towns – Vernon and Big Bend – have used a shared fire department for years. But now each town will be getting its own fire department, so the machinery and equipment had to be divided between the two new entities.

Instead of having the machinery and equipment appraisals done by a Certified Machinery and Equipment Appraiser (CMEA), it was performed by the town supervisor, who kept the appraisals low so that both communities could get equipment at “reasonable prices.” None of this would have been a huge deal – except that there was a clerical error made in the bidding process.

Now Big Bend has the lion’s share of the equipment, and to add insult to injury, Vernon has no idea how much of a loss they incurred because of the non-professional appraisal that was done. It’s estimated that the loss is somewhere around $180,000, but who can know for sure?

Always have a CMEA perform an equipment appraisal. A Certified Machinery and Equipment Appraisal is defensible, irrefutable, and substantiated.

• If the fixed assets are given a value other than depreciated net book value, an equipment appraisal must be ordered.
• The equipment appraisal can only be performed by a qualified individual.

Have you contacted your CMEA appraiser? If not, contact us today!