Definition of Terms Used in the Asset Valuation Process

For more than 60 years, Rabin has been a family-held industrial auction and real estate investment company, with a focus on the acquisition and sale of industrial equipment and facilities around the world.  This is the first of a blog series that defines common terminology used by the industry. 

Our information comes from the American Society of Appraisers.  ASA states that the following definitions are the starting point for terms that are based in standard appraisal theory.  Furthermore while they “provide the fundamental value concepts; they are not the only acceptable definitions, since contracts or jurisdictions may dictate somewhat different philosophies.”  The ASA definitions are as followed:

·         Fair Market Value - An opinion expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date.

·         Reproduction Cost New - The cost of reproducing a new replica of a property on the basis of current prices with the same or closely similar materials, as of a specific date.

·         Replacement Cost New - The current cost of a similar new property having the nearest equivalent utility as the property being appraised, as of a specific date.

·         Orderly Liquidation - An opinion of the gross amount, expressed in terms of money, that typically could be realized from a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis, as of a specific date.

·         Forced Liquidation Value - An opinion of the gross amount, expressed in terms of money, that typically could be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.

As leading industrial and commercial liquidators, Rabin has sold equipment assets in every trade sector and on almost every continent.  Our professional asset appraisal services provide an essential starting point for any asset-based lending or disposition process.   

At Rabin, our professional machinery and equipment appraisal team has been working together for more than 25 years—gaining extensive experience in nearly every facet of industrial equipment.  Our seasoned appraisers have completed hundreds of reports, providing our clients with real-world obtainable value conclusions.  Please contact us to learn more about our comprehensive services. 

Source:

Machinery & Technical Specialties Committee of the American Society of Appraisers, July 25, 2010

http://www.appraisers.org/Disciplines/Machinery-Technical-Specialties/mts-appraiser-resources/DefinitionsOfValue

Rabin’s Auctions are Run Extremely Well

Rabin auctions are fun and exciting and offer bidders not only an opportunity to bid on great machinery and equipment at a fraction of the original price but to network with others in the industry.  However in order for our auctions to run smoothly and efficiently, it takes a team of proficient, experienced professionals to ensure that always happens.

 

In addition to the preparations that are required to get auction items ready to sell, we also have work to do to get an auction site ready before the sale takes place.  Generally our crew starts preparing the site the day before but it depends on the size of the auction. For bigger sales, the site preparation may require a few days. 

If the auction is scheduled to take place in the factory, it is cleaned and everything is double-checked to make sure it is ready to go.  The next step is to set-up the technology that will be used during the sale.  Rabin’s auctions require state-of-the-art audio visual equipment, screens, a stage, a podium for the auctioneer as well as tables and chairs set-up for the bidders. 

To simultaneously run the live auction site and the Internet bidding, we utilize screens, computers, and PA systems to professionally deliver the auction proceeding to our bidders.  Additionally we need to set-up high-speed Internet connections and phone services to allow online customers to bid over the Internet or to call-in a bid. 

Our decades of experience and a proven track record of providing successful auction and liquidation services have allowed our clients to put their trust in us.  Please check out our website to learn more information about upcoming auctions.  If you wish to sell surplus items, please contact us and we will provide you with a free, confidential consultation. 

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  

The Steps that Go into Preparing a Rabin Auction

One of the reasons that Rabin auctions are so successful is that we carefully plan out everything right down to the very last details.  We start the process weeks, and in some cases, months before the auction even takes place to ensure it is well-organized and runs without a hitch.  Our sellers and buyers alike have come to expect nothing less of a Rabin auction.

 

To set up a factory for an auction, our experienced team goes through the facility and does a complete inventory of the equipment, which helps to determine the order of the sale. The next step is to clean the equipment and machinery and then arrange it so it can be optimally viewed during the auction.  We do our best to keep big pieces of equipment hooked up and ready to demonstrate operational abilities.

 

For smaller equipment, we gather it together and visually display it so buyers can see what they are bidding on.  Much smaller items are grouped together in lots and generally offer a good value.  From here the Rabin team catalogs the items recording all of the pertinent information including photographs and tagging each item with a number. 

For over 60 years, Rabin has taken a comprehensive and detailed approach to all of our auctions.  As leaders in the industry, we have sold equipment assets in every trade sector and on almost every continent.  We have the leverage to purchase complete factories, including real estate, and conduct auctions of any size on behalf of our clients. Please contact us if you are interested in selling or buying at one of our auctions. 

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  

An Environmentally Responsible Way to Recycle Equipment

It may not have occurred to you but auctions are an environmentally-friendly service.  They offer an efficient way to keep functioning machinery and equipment out of landfills, and instead, get it into the hands of companies who need it.  Large, well-established companies can get rid of their older equipment in a cost-effective manner by selling it to make room for new, up-dated pieces.  Smaller companies or start-ups benefit by having an opportunity to purchase equipment they could never afford to buy brand-new. 

At auction a new company may be able to buy a complete production line or purchase their first pieces of manufacturing equipment to get the business started.  Sometimes companies only use the equipment until they have the means to purchase new or newer used equipment.  This cycle of companies selling off their older equipment to purchase new or newer used equipment keeps it out of landfills while it is still operational.  Often a piece of machinery may be sold several times over before it has outlived its usefulness.

   

Even once a piece of machinery is no longer operational or becomes obsolete, auctions provide a method for selling unusable equipment for scrap metal.  The metal is extracted from the machinery and then sold to refineries to be recycled into new products or building materials, thus continuing the recycling process.

We invite you to visit the Rabin website and take a look at our current auction listings that are comprised of a wide range of industries.  Also be sure to check back frequently as we are always updating our inventory of equipment and machinery.  In addition if you have surplus equipment to sell, please contact us for a free confidential consultation.

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  

Great Deals on Equipment Can be Found at Auctions

If you are a business owner and want to expand operations or need better-quality equipment, you know it is not easy to come up with the type of capital required to buy brand-new.  This is why you should look into purchasing used equipment at auction or through liquidation sales.

   

Manufacturing equipment is different from high-tech devices such as computers as it is built to last and can easily run for decades.  Furthermore just because a company decides to sell used equipment does not necessarily mean it has outlived its usefulness.  It may be a case of downsizing or needing to make room for up-dated equipment.  In some cases, a company may be going out of business and must sell.  Whatever the reason, it presents a perfect opportunity for small businesses such as yours to come in and buy up equipment that would be out of reach if it was brand-new. 

Frequently used equipment is from large corporations that have the ability to invest the type of capital that is required to purchase brand new, state-of-the-art equipment.  Many times they routinely replace their equipment once newer models become available with improved capacities, faster output and new engineering designs.  This does not mean that the older equipment is past its prime; on the contrary, it should have plenty of life left to admirably perform many more years on your factory floor. 

   

We encourage you to let an auction company expertly assist you in the process.  At Rabin our auctions allow smaller or entrepreneurial companies just starting out to have the opportunity to purchase high-quality, working equipment for a fraction of the original purchase price.  We provide a superior buying and selling experience with the most accurate product descriptions, high-quality photos and unmatched customer service.  Ask our buyers—Rabin auctions are organized, professional and fun!

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  

Looking for Machinery and Equipment Financing?

At Rabin, we have specialized in offering our clients a wide range of exceptional services for over 60 years.   Along with our excellent reputation as an industrialauction and real estate investment company, we also offer businesses help with financing essential machinery and equipment. 

When your company decides to finance, it allows you to purchase new equipment to keep up with the demands of a growing business or to use the equity in equipment you already own to access working capital. Our machinery and equipment based financing programs offer businesses with a financial leverage but an inadequate cash flow the opportunity to move forward with an asset based secured term loan that provides the required liquidity.

To underwrite your business a loan, we take our years of experience and use that knowledge to place a value on your industrial assets and real estate that is based on our actual sales or sales from the marketplace.  We have the advantage of being able to accurately evaluate your assets so you will not require a third party to appraise the supporting assets to provide a fair value.  Our seasoned industrial equipment and machinery appraisers are more than qualified to do the job and have been together for over 25 years providing clients real world-obtainable value conclusions. 

Furthermore Rabin can offer financing secured by machinery and equipment in turnarounds and other situations that may not get approval at a more conservative commercial bank.  You will find many of the terms on our website but we encourage you to contact one of our financial representatives by filling out an online form to find out more about our machinery and equipment based financing programs. 

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  Please contact us to discover how we may assist with your asset liquidation process.

Prepare Beforehand for a Professional Appraisal

If you are thinking about selling surplus machinery or equipment or need to determine the value for asset-based lending, or to provide a “selling tool”, you will want the services of a professional appraiser.  However before you contact an appraiser, there are some steps you can take to help improve the value of your equipment. 

One of the first things you need to do is to clean and if necessary paint the items to maximize the appraised value.  Additionally make sure items are fully functional and take care of any repairs.  The time to do all of this is before you bring in the appraiser.  

The next step is to put together a detailed list of the equipment and machinery to be appraised, include descriptions, photographs, general condition and any repair records if applicable.   Add to that all of the information regarding the purchase of the items such as receipts, owner’s manuals, warranty certificates, and serial numbers.

Now you are ready to look for an appraiser that has specific experience with your industry and is familiar with the type of equipment and machinery you need appraised.  The appraisal will base valuations on actual sales and take into consideration factors such as: the age, condition and maintenance of the items, market conditions and demands, geographic location, specialized design and/or modifications, technological obsolescence, and industry trends/economic fluctuations. 

At Rabin, our professional machinery and equipment appraisal team has been working together for more than 25 years and has extensive experience in nearly every facet of industrial equipment.  We offer clients appraisals that are exceptionally thorough and provide real-world obtainablevalue conclusions.

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward,and the Railway Express Agency.  

How Does Depreciation Affect Your Equipment’s Value?

For accounting purposes, depreciation is defined as a decrease in the value of an asset as a result of wear and tear, age, or obsolescence.  Thus most assets lose value or depreciate over the course of their lifetime and need to be replaced once they reach the end of their lifecycle.  However when machinery and equipment assets are appraised, depreciation is handled in a slightly different manner. 

The NEBB Institute, who among other things certifies professionals in the art of machinery/equipmentappraisals, explains that depreciation has a different meaning to machinery and equipment appraisers.  They add that, “To appraisers, depreciation is the estimated decrease in value of an asset from its initial purchase price.  The estimated decrease is based on a number of criteria, such as physical, functional, and/or economic factors.”  In other words it may not matter what the actual age is of a piece of equipment, but rather if it is operational and still used in the industry.  Finally the most important fact that impacts the value of the asset is, “How strong is the market demand”?

By having a professional appraisal done before you try to market your surplus equipment, will help to ensure you get the maximum value for your assets.  Additionally there are some circumstances where it is not only a good idea but may be required for insurance purposes, mergers and acquisitions and in orderly or forced liquidations. 

Another reason that certified appraisals make sense is they are more readily accepted by financial institutions and corporations as well as the IRS and the courts.   Keep in mind that appraisals are defined by factors such as replacement cost for new or used equipment or machinery, fair market value, geographic location and specialized design and/or modification.  Other considerations that impact value are technological obsolescence and industry trends as well as economic fluctuations. 

 Sources: nebbinstitute.wordpress.com/

Rabin Worldwide is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  Please contact us to discover how we may assist with your asset liquidation process.

Online Bidding Strategies

Online auctions are a convenient way to access numerous auctions without spending the time and expense of traveling to each location.  Both business owners and equipment dealers have the chance to study auction items to get a sense of real values and prices in the marketplace and to comparison shop.

Since you do not have to travel to each separate auction site, it frees you up to be able to bid on only one or just a few items, and sites such as Rabin Worldwide do not charge a fee for online bidding.  Additionally online auctions provide your whole team the opportunity to get involved in the process and to weigh-in on the value that the acquisition of the equipment brings to the business.  By taking advantage of the ability to pre-bid, your company is even able to implement budget restraints and project costs more accurately.

The experts have tips on how to maximize the benefits of online auctions to get the most out of the experience.  The first suggestion is to research as much as you can about the items you are interested in buying such as age, condition, and any warranty information.  Check the Internet for similar items for help in determining value.   Be sure to read all of the information provided by the auction house carefully in advance, and if you have further questions, email them to see if they can get you more photos or information.

Well before any bidding is due to start; set a limit of how much you want to spend on the items.  Determine the worth the items have to your business and do not bid any higher than that.  Lastly before you place a bid, make sure you are aware of any additional charges or fees and understand all the terms of payment and conditions of the sale.

Rabin Worldwide is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  Please contact us to discover how we may assist with your asset liquidation process.