So, how DO our appraisers know what it’s worth?

A primary consideration is the valuation method that will be applied to appraise the assets and inventories, and this is determined on the business circumstances that have initiated the appraisal.

There is no single value for any item, its value will change depending on the business circumstances that govern how the assets are being viewed. For instance, the Fair Market Value for assets in exchange between a willing buyer and willing seller will not be the same as the Liquidation Value of the assets if they are being sold in a distress situation for realization in the short term.

Our appraisers are knowledgeable in all types of valuation methods and will appraise the assets based on your needs for each particular business scenario. All of our appraisers are accredited by, and are Members in Good Standing with, CPPAG (Canadian Personal Property Appraisers Group, the sole accrediting body for asset appraisers in Canada).

Read on for an explanation of the different types of valuation methods and when they are applied.

This is the value at which the item(s) would change hands between a willing buyer and a willing seller, neither being under the compulsion to buy nor the compulsion to sell; and both having reasonable knowledge of the relevant facts.

FMV depends upon actual worth in the marketplace and not upon theoretical worth. It is determined by the actual selling price of the items, sale of comparable items, and the cost of reproduction. The time of appraisal and the supply and demand of the particular assets in the marketplace will also affect FMV.

This is the value of the assets when part of an arm’s length transaction with limited time to complete this transaction, and is usually below the FMV.

In most cases, there are circumstances that force the sale to occur (e.g. financial conditions, Bankruptcy, Receivership, Bailiff Seizure, Lease Termination, etc) and bring the assets into the marketplace to be sold to the highest bidder.

In determining LV, consideration is given to method of liquidation, time available, current market conditions and any other case-specific factors that could affect value. This is often perceived as a “worst case scenario” valuation.

This is an opinion of value of net returns from a systematic and orderly wind down of a company’s operations and sales. Finished goods, WIP, raw materials and capital assets (owned or lease equity) are all considered in determining this value. These factors are typically evaluated within a 90 to 180 day window in the determination of NOLV.

This valuation represents the cost of replacing the assets after a “total loss” and is commonly used for insurance purposes.

The reported value is based on both new and comparable pre-owned assets and can include consideration for transportation, installation and upgrades required to a premises to accommodate the new assets. The value determined is the cost of replacing the assets based on its pre-loss condition.

This is Replacement Value (RV) of the assets less depreciation.

This is an opinion of the estimated value to be realized for the assets as installed or in place for the intended use, in an exchange between a willing buyer and a willing seller.

In this scenario, neither buyer nor seller is compelled to either buy or sell, and both parties are aware of the relevant facts as of the date of the appraisal.

One method of arriving at this valuation, is to assess either the LV or FMV and add an allowance for installation, necessary electrical and mechanical infrastructure and enhanced values to any customized or site-specific assets that at Liquidation Value would be assessed at salvage value only.

Note: this type of valuation does not usually take into consideration any leasehold improvements unless they are specifically related to the function of a particular piece of equipment, or covered under a security agreement.

This is the value obtainable for the assets through private negotiations between a willing buyer and a willing seller on a total entity basis in order to continue operations in place.

These negotiations are usually not restricted by time and therefore can take the longest to complete. While there is no consideration given to the financial health of the company, this valuation takes into account future opportunity within the marketplace based on location, product lines, asset and leasehold durability and longevity.

In most cases, GCV will be greater than any other value provided.

This is an opinion of value based on information supplied to the appraiser and evaluated without the benefit of viewing the assets: e.g. asset photo and/or description-only provided.

This is also considered a type of appraisal, and is one of the services provided by TAS.

We really do know what it’s worth.