Replacement Cost
How much would it cost to replace an asset?
Fair
Market Value
What would the asset sell for in a deal between a willing buyer and a willing seller?
Orderly Liquidation Value
What happens if an asset is compelled to be sold, such as moving to another location?
Forced Liquidation Value
What happens if an asset must be sold with extreme compulsions, such as in plant closure?
Definitions of Value
Replacement
Replacement Cost New or "RCN" determines the cost to replace a property with a similar utility. These studies involve understanding your production needs and properly assessing what the replacement would entail. This can save you from overages on your insurance coverage, taxes, or CapEx strategy. In some instances, replacement isn't enough, and a study of the Reproduction costs is needed. Reproduction Cost New is the cost to replace the exact property. This can save people from headaches of explaining the value of their property in a loss or dispute after the fact.
Every appraisal deals with the questions posed by understanding what and how you would replace a property. Looking at valuations from a greenfield approach often allows businesses to look forward instead of being tied to the past.
Fair
Fair Value & Fair Market Value or "FMV" is the property's value between a willing seller and a willing buyer. There are many different conditions to consider in a fair valuation: Are you acquiring something in place? Is it removed from it's existing location? Is the asset part of a business and providing value that can only be understood in the context of a business.
The majority of my work in the last decade has been understanding the dynamics of a fair transaction in the context of taxation, financial reporting, and banking purposes.
Liquidation
Liquidation values understand the value in trying situations such as an impairment, a loan workout, or a plant closure. There are two types of liquidation understanding there is a range of liquidation of situations. Orderly Liquidation Value or "OLV" is where one or more parties are compelled to sell the asset in an orderly way, meaning that there is still time to work together for a beneficial outcome. Typically for equipment, this is 3-6 months but varies by industry. Forced Liquidation Value or "FLV" considers value if the compulsion is more time-sensitive, forcing the sale to occur within months, weeks, or even days.
I started remarketing off-lease equipment, so I understand the importance of practical solutions in these situations.
Other Valuation & Consultative Services
Asset Planning
Helping you with a capital asset strategy on purchasing, donating, or appealing
Valuation White Papers
An academic study of the aspects of value for a topic
Economic Useful Life
Determining the lifecycle and how long assets remain economically viable
Fair Rental Studies
Understanding and testing the dynamics of a lease or rental of equipment
Cost Segregation
Allocating and identifying short life depreciable property from tax records
Residual Studies
Projecting the value of an asset or a group of assets during or at the end of a term
End of Life Study
Investigating the aspects of markets as industries move away from an asset
Inventory Management
Equipment inventory and inspections including barcode tracking solutions
