Mergers and Acquisitions – Part 3
Appraise and Sell Your Business Equipment For A Merger Or Acquisition
In article 3 of our series on Mergers and Acquisitions (M & A’s), we’ll look at how appraising your business equipment and selling the pieces that are no longer needed will provide you with a smarter, more efficient M & A process. We’ll also provide you with some smart actions to consider that could help you have a successful appraisal and selling experience.
You’re on the brink of growing your business in a valuable merger, or you’re positioning your business for a successful acquisition. You know that you’ll have excess and redundant equipment and you’d like to get as much value as possible for those items. But what’s the best way to determine that value?
You need to make the right decisions when figuring out how to price your business equipment. And the best way to make that happen is by partnering with a Certified Business Equipment Appraiser and a company with a proven track record of success when it comes to equipment liquidation.
Some quick housekeeping. We kindly remind readers that our research is intended to spark new ideas and inspire actions that can help businesses.
Always remember, if you’re a company with plans to enter a merger or an acquisition, you’ll want to consult with accounting, tax, banking, and legal representatives experienced in these fields.
The Advantage Of Fair Market Value
Many experts would debate that the most important topic for a business owner to understand when beginning the process of selling equipment is what the fair market value of their equipment means.
To borrow from one of our earlier articles on appraisals, here is a breakdown of this concept:
“Fair market value, also referred to as FMV is defined as an ‘estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.’
When selling your business equipment, the primary goal is to reach a fair market value. The FMV can be determined by an appraiser using an array of tools. The most important tools a good appraiser offers are experience in your industry and/or a trusted network of experts in your niche who can estimate the fair market value of your equipment.”
Why Is The FMV Important?
So why is the FMV more important during a merger than other instances? The reason this concept is so important when discussing a merger or acquisition is because a company that is entering one of these situations will likely have more time to plan and execute. As we discussed in our last 2 articles, M & A’s are strategic processes. Mergers and acquisitions are built on gaining market share.
A company that is selling equipment in preparation for a merger or acquisition will have a much better chance at not being a ‘pressured’ seller and will not need to ‘pressure’ a buyer. There is more time to explore the marketplace for the highest value customer, which will add to the seller’s bottom line.
Quite often, a business equipment buying and selling situation occurs because of an unfavorable shift in economic or customer trends. This leaves the unlucky business owner on a short schedule to ‘liquidate’ the shop which will get them a much lower return on their equipment. Liquidation value is consistently lower than fair market value. Remember, we want to reach FMV. With a merger, companies may be able to wait longer when selling their equipment. They will not need to ‘liquidate’. Allowing equipment to have more market exposure is a tremendous help in getting the fair market value for the items.
What’s The Next Action?
So what does all of this mean and what is the next action a business owner should take when selling equipment for a merger? Getting the fair market value for your business equipment is determined by the timing of your liquidation and the resources your chosen seller has to offer. Finding experts with access to a network of qualified buyers can be extremely valuable.
Your next action is to find an expert appraiser with the resources of a trusted, qualified network. Let’s explore the appraisal process and learn how you can employ the best appraiser for your specific situation.
The appraisal process is generally a straightforward set of actions that help you determine the value of your products. We’ve broken it down into five, easy to understand steps for the purpose of M & A’s.
5 Steps For An Appraisal
- Identify the equipment to be appraised.
- Understand the equipment’s use, select the market, and best selling conditions.
- Collect all of the relevant information to determine your equipment’s value.
- Use the appraiser’s available resources to find comparable pricing for similar equipment.
- Provide estimates of the fair market value and liquidation value for your equipment.
So how do you find the best appraiser for your business?
First, find an appraiser who is USPAP (Uniform Standard of Professional Appraisal Practice) certified. This certification assures that the appraiser’s report meets industry standards and is in compliance with the laws of jurisdiction regarding the appraisal report.
Second, work with an appraiser who provides you with accurate and credible values for your equipment. As you have probably realized, employing a certified, high-quality appraiser is critical. They will be able to get you the most value for your items. You want an appraiser with extensive experience, a far-reaching network of sales support and qualified buyers, and an honest reputation.
This is where Auction Masters checks into the game and why so many businesses choose us to help them with appraising and liquidating their equipment. Our team of professionals offers comprehensive services to get you the most value for your sale. We work with you from the beginning of the appraisal process to the very end of your auction.
Our priority is getting you fair market value (or better!) for your business equipment. We continue to help businesses from various industries reach their selling goals, and we consistently exceed them! If you’re looking to prepare your business for a merger or acquisition with an informed appraisal for your business equipment, give Auction Masters a call. We’ll help you sell the equipment you no longer need at the best possible value available. Contact us today and we’ll help you get started!