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February 17, 2012
by EquipNet News
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Machinery and Equipment Appraisals in Business Valuations

A business valuation is useful for a business of any size – and not just if the owner is interested in selling. Rather, a valuation is an important planning tool that can provide a business owner with a snapshot of the company’s performance. This ca

n help the owner develop business performance improvement goals, make crucial decisions like whether to go public or add shareholders, and ultimately, plan for a graceful exit from the business. In order for a valuation to be helpful in these situations, however, it must be accurate.

As we wrote in last week’s post, titled “Machinery and Equipment Appraisals in Buy/Sell Agreements,” a company’s value is based on many factors and if any one of them is valued improperly, the entire valuation will be inaccurate. For example, there are several ways to measure the value of the company’s machinery and equipment: book value, fair market value, and liquidation value. Unless a business is in a liquidation situation, there’s no reason to use this valuation method when determining the value of a business. The book value of a piece of equipment is determined by a depreciation schedule, but doesn’t necessarily provide an accurate picture of how that piece of equipment would do on the open market, which fair market value does. Using book value of machinery and equipment rather than fair market value in a business valuation can skew the results and open a business owner up to the liability that comes with making crucial business decisions with inaccurate information.

Software and instructions for determining your company’s value yourself are easy to find, but they’re no match for the expertise of a certified appraiser. A certified appraiser can help you avoid pitfalls like using an incorrect valuation method and will ensure that the information you use to make your business decisions is accurate. Check out The Asset Accuracy Resource Center for more information about appraisal and valuation services provided by EquipNet.


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February 15, 2012
by EquipNet News
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The Sarbanes-Oxley Act and the Appraisal Industry

The Sarbanes-Oxley Act of 2002, more commonly referred to as Sarbanes-Oxley, Sarbox, or SOX, is a federal law that created and enhanced standards for all U.S. public company boards, management, and public accounting firms. The bill was enacted as a reaction to a number of major corporate accounting scandals, including those within Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom. These scandals shook public confidence in the nation\’s securities markets, and cost investors billions of dollars when the share prices of affected companies collapsed.

Named for its sponsors, U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, SOX contains 11 sections that range from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the law. The act also created a new agency, the Public Company Accounting Oversight Board (PCAOB), which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies.

Those who opposed SOX claim it has reduced America\’s international competitive edge against foreign financial service providers, saying SOX introduced an overly complex regulatory environment into U.S. financial markets. Proponents say that SOX has improved the confidence of fund managers and other investors with regard to the veracity of corporate financial statements.

Sarbanes-Oxley had an effect on the appraisal industry as well. Section 201 (g) (3) of SOX prohibits auditors from providing appraisal or valuation services, which means that in order to have appraisals performed and not be in violation of SOX, companies must be sure to use licensed and USPAP-compliant appraisers.

As a reminder, with our acquisition of Present Value LLC, a worldwide appraisal and advisory company, EquipNet now possesses expanded Certified Machinery and Equipment (CMEA) capabilities. For more information, check out the EquipNet Asset Accuracy Resource Center or email us today at Sales@EquipNet.com.

 


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February 14, 2012
by Julie Baker
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Valentine\’s Candy Numbers

Did you know that the New England Confectionery Company manufactures eight billion Sweethearts Conversation Hearts each year? Time NewsFeed examines a variety of Valentine\’s Day stats in this article.

Candy isn\’t just for Valentines Day. Per capita, Americans consumed 24.7 pounds of candy in 2010, according to U.S. Census Bureau statistics.

According to the National Retail Federation’s Valentine’s Day Consumer Intentions & Actions Survey (no, we did not make up that name), Valentine\’s Day is very good for the ecomony. In fact, the average person celebrating Valentine\’s Day will shell out $126.03, up 8.5 percent from last year’s $116.21 and the highest in the survey’s 10-year history. Total spending for the holiday is expected to reach $17.6 billion, with $1.5 billion of that spent on candy. 

 

Chocolate lovers may be interested to know that, according to U.S. Census Bureau reports, there were 1,177 U.S. manufacturing establishments that produced chocolate and cocoa products in 2009, employing 34,252 people.  

Whether you are eating or making candy today, happy Valentine\’s Day!


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February 9, 2012
by Jonathan Dickerson
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Pharmaceutical Packaging Equipment

Most major pharmaceutical manufacturers around the world prefer to produce their life-saving, disease-defeating, condition-conquering products using only the best available equipment. When you consider this fact, it is no wonder why so many major ph

armaceutical companies around the world look to EquipNet’s MarketPlace to source the premium equipment they need, for a fraction of the price of buying new. For any pharmaceutical manufacturer out there looking to purchase top-notch packaging equipment for their facility, check out some of the premium pharmaceutical packaging equipment available now on the EquipNet MarketPlace:

Unused IWK – Oystar TFS 80 Tube Filling Line with SC5 Cartoner

Inova Syringe Filling Line

ZED Vial and Syringe Kitting – Packaging Line

Uhlmann UPS 4ET Blister Machine with Uhlmann C300 Cartoner

If you’re searching for a particular piece of packaging equipment, please contact EquipNet at (781) 821-3482 or via email at Sales@EquipNet.com.

 


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February 8, 2012
by EquipNet News
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Machinery and Equipment Appraisals in Buy/Sell Agreements

A buy/sell agreement, or buyout agreement, is essentially a pre-nup for business partners, and if you’re a co-owner of a business that doesn’t have one, you should. A buyout agreement states how the company will buy out a co-owner who leaves the company for any number of reasons, including retirement, a sale, death, or even termination. This legal document protects both the partner who’s leaving and the partner who’s staying and taking over the departing partner’s share of the business. A buy/sell agreement should be written as close to the start of the business as possible, because as the company’s value increases, so does the risk associated with not having one.  

A properly written buy/sell agreement will include the financial terms of a buyout, state who will oversee the buyout, and explain how ownership will be transferred. It will also state how the partners will determine the value of the business at the time of the buyout.

A company’s value comprises a whole host of factors, including intangibles, like intellectual property or expected future performance, and tangibles, like office or lab equipment or heavy machinery. This can make it difficult for a business owner to ascertain the true value of his or her business without some help. That’s why it’s a good idea to write into your agreement that you’ll hire an objective third-party appraiser to determine the value of your business and all of its property. By hiring an appraiser, you’ll get a value for your business that will be fair and accurate, and will stand up to scrutiny in a court of law.    

Another good practice is to hire someone to perform an initial business valuation, including an appraisal of all machinery and equipment, before the buy/sell agreement is written. This will give the partners a deeper understanding of the valuation process and may help them write their agreement.   Check out The Asset Accuracy Resource Center for more information about appraisal and valuation services provided by EquipNet.

A couple of weeks ago, we announced our acquisition of Present Value LLC, a worldwide appraisal and advisory company. Because we’ve significantly expanded our appraisal services with this acquisition, expect us to write more frequently about machinery and equipment appraisal topics in our blog. If there’s a particular topic you’d like to see in this forum, or if you’d like to learn more about our expanded appraisal services, contact us today!


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