More Terms Used in the Appraisal Process

At the Rabin Company we are a family-held industrial auction and real estate investment company that has a focus on the acquisition and sale of industrial equipment and facilities around the world.  This is our second installation of blogs dealing with terminology used by the industry for determining valuation in an asset-based lending or disposition process.

The American Society of Appraisers defines the following terms based on standard appraisal theory: 

·         Fair Market Value in Continued Use with Assumed Earnings - 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 and assuming that the business earnings support the value reported, without verification.

·         Fair Market Value in Continued Use with Earnings Analysis - 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 and supported by the earnings of the business.

·         Fair Market Value (Installed) - 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, considering market conditions for the asset being valued, independent of earnings generated by the business in which the property is or will be installed, as of a specific date.

·         Fair Market Value (Removed) - 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, considering removal of the property to another location, as of a specific date.

Our professional asset appraisal services provide an essential starting point for any asset-based lending or disposition process.   At Rabin we base valuations on our actual sales as well as sales values in the marketplace, and we consistently deliver asset values to banks and corporations that they know they can rely on.  

In addition to being specialists in providing companies with expert asset valuation and asset recovery services, we also run an in-house commercial real estate investment and management company. 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

Past Success Stories Using Rabin’s Services

The Rabin Company has been leading industrial liquidators and auctioneers for more than 60 years.  As a result our portfolio of success stories is quite large.  We have experience in most every industrial sector and help companies sell surplus equipment as well as provide solutions for bankruptcy, insolvency or corporate restructuring.

Several years ago we had the opportunity to assist Johnson & Johnson with liquidating a gauze bandage production facility near Dallas, TX.  The property consisted of 223 acres of land and a manufacturing, warehouse and office building.  Since this was an older facility, the company had a difficult time finding a buyer.  This is when Rabin stepped in and made a difference in the outcome.  We bought the complete facility including all of the equipment as well as the surrounding acreage.  

Through an extensive marketing campaign and utilizing our vast networking base, we were successful in finding a buyer for the facility.  We then proceeded to auction off the items that the new firm was not interested in.  Lastly we subdivided the real estate and sold parcels to a developer who intended to bring needed services and housing to the area.  The whole project turned out to be a winning situation for all parties involved. 

This is just one example of what we call the Rabin Difference.  Our comprehensive services include evaluating, marketing, and selling industrial assets.  We have the resources and people required to conduct aggressive advertising campaigns to get equipment assets to the buyers who need them.  Moreover we have the expertise to navigate sophisticated and complicated transactions and the financial ability to close deals of any size.

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.  

Signs Your Business May Be in Trouble?

There are several telltale signs that your business may be in trouble and you sooner you accept the facts, the better.  As an owner or director of a company, it is your responsibility to stay informed of the current state of the business.  All too often companies take a passive approach and do not deal with problems quickly and aggressively enough.  Waiting until it is too late to make changes can mean insolvency/bankruptcy.   

One of the signs that your business is not healthy is failing to meet sales quotas or targeted goals for several months in a row.  Another cause for concern is not retaining current customers, while at the same time, not attracting new ones.  Continuing in this direction will eventually catch up with the business and can lead to serious cash-flow problems that create an inability to pay creditors on time and meet payroll obligations. 

Many problems companies experience can be attributed to the lack of a solid business plan.  This is the time to take a hard look at the company’s budget and go over it line item by line item.  Make sure your whole team as well as the Board of Directors are meeting regularly and really tackling the serious problems that are ahead of you.  Put a realistic plan in place and stay on course. 

On a personal note, examine your own compensation package and that of the other executives.  It may be that salaries have risen faster than the business can presently handle and they need to be renegotiated.  Communicate with the entire staff regarding the current difficulties that the business is going through and try and get them onboard to help move forward. 

Furthermore assess the company’s day-to-day operations to ensure you are running lean.  Look into selling any surplus or unproductive equipment or machinery.  It can be a good way to put more cash into the business to pay off creditors or to make strategic investments to improve the company’s outlook.  

In business for over 60 years, Rabin Worldwide is an industrial auction and real estate investment company, with a focus on the acquisition and sale of industrial equipment and facilities around the world. In addition to being specialists in providing companies with expert asset valuation and asset recovery services, we also run an in-house commercial real estate investment and management company.  Rabin Worldwide is headquartered in San Francisco with a European subsidiary office in Manchester, United Kingdom.

While there may be some debate as to the frequency and length of time it takes, the fact is that many new businesses fail.  There are a variety of reasons for this and even well-established companies struggle to stay relevant.  According to an article in Analytics Magazine, “Of the original Standard and Poor’s (S&P) 500 List created in 1957, just 74, or only 15 percent are on the list today.”  Furthermore of the 74 that remain, only 12 have outperformed the S&P index average. 

So why do new businesses have such a high risk of failure?  Experts point to the fact that many new companies do not start out with a solid business plan.  Before turning an idea into a business, a considerable amount of research needs to be done.  The data should include information on the product’s target audience and current market demand as well as the projected potential for growth in the future.  Additionally an efficient delivery system must be developed in the early planning stage that gets the product easily into the hands of the consumer. 

 

Upfront there needs to be an honest evaluation of the kind of competition the business will face and a realistic assessment of start-up costs along with any legal requirements that must be met.  To save money, future business owners should determine if equipment can best be purchased through liquidation sales, at auction, or leased.  Also most new companies require technology so remember to include that into the start-up costs.

 

Once the business is started, be aware of overreaching by expanding too early or too large and always have a cash reserve on hand in the event of an emergency.  Keep operational cost low and do not make the mistake of paying out more than you can afford on rent and labor.  Lastly, keep in mind that some types of businesses do have an even higher rate of failure such as independently owned restaurants or tech companies.  

* http://www.analytics-magazine.org/may-june-2012/577

* http://www.moneycrashers.com/reasons-business-failing-companies/

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, and the Railway Express Agency.  Please contact us to discover how we may assist with your asset liquidation process.