In the valuation world, everyone knows BV experts continually seek training and resources to make their appraisal work increasingly defensible, reliable, and accurate. For some engagements, business appraisers find it much easier and more practical to work with third party specialists, such as a certified and experienced machinery and equipment (M&E) appraiser. Regarding the use of the work of specialists in the engagement to estimate value, the AICPA’s Statement on the Standards for Valuation Services (SSVS 1) paragraph 20 states:
In performing an engagement to estimate value, the valuation analyst may rely on the work of a third party specialist (for example, a real estate or equipment appraiser). The valuation analyst should note in the assumptions and limiting conditions the level of responsibility, if any, being assumed by the valuation analyst for the work of the third party specialist. At the option of the valuation analyst, the written report of the third party specialist may be included in the valuation analyst’s report.
Paragraph 34 of SSVS 1 details a frequent method used in the appraisal world: the adjusted net asset method under the asset approach. If you decide to engage a machinery and equipment appraiser for this portion of your engagement, you can rely on them to take care of identifying the assets and liabilities, assigning a value (individually or in the aggregate) and if applicable, the liquidation costs. The more appraisers bring in an M&E appraiser, perhaps the more engagements they can handle a year, and vice versa. With the blessings and full implementation of SSVS 1 this past January, John Harris ASA, MCBC, CM&AA (director of the NEBB Institute) and his membership recommend business appraisers and M&E appraisers seek a way to capitalize on the unification of standards - making the work produced as accurate as possible, and perhaps reaping the increased profitability. Having an M&E appraiser as part of your toolkit of appraisal services may help you distinguish yourself in a bid, especially when the engagement requires more than one approach.
To help appraisers network and understand the value M&E appraisers can offer, join moderator John Harris and his outstanding panel of experts in their upcoming teleconference, Valuing Machinery & Equipment. The panel includes Dr. Stanley Pollock JD, DMD, SBA, CBA, MCBA, CMEA (Professional Practice Planners, Inc.), George A. Abraham CSBA, BCBA, CMEA, FCBI, BCB, MCBC (Business Evaluation Systems, Inc.), KC Conrad CBA, MCBC, CMEA, SBA (American Business Appraisers) and Gary Leeman CPA, ABV, CMC, SBA (Gary Leeman CPA, PC). Click here to register for this teleconference, but hurry—the event is next week on Wednesday, July 29th at 10 am PT.