Approaches, Standards, and Terms Although machinery and equipment appraisals differ from business valuations as a distinct branch of the appraisal practice, many overlapping concepts reinforce and support the key factors needed to establish a reliable and defensible opinion of value for the subject assets. This article provides a primer on the subject matter. “In the world of valuation, the most important element is to understand what drives value.” Bruce Greenwald (economist and professor) Although machinery and equipment appraisals differ from business valuations as a distinct branch of the appraisal practice, many overlapping concepts reinforce and support the key factors…
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Of a Real Estate Centered Entity As business valuation analysts, how many of us have ever agreed to value an equity interest in a gas station, or a hotel, or some other business that operates with real estate as an operating asset? For me, that answer is “frequently.” Yet, over the years my view of how to undertake this type of assignment has changed. These types of businesses deserve more care and understanding than a simple net cash flow divided by some cap rate. As business valuation analysts, how many of us have ever agreed to value an equity interest…
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Part II of IV This article is part two (read Part I here) of a four-part series related to the bankruptcy-related appraisal of industrial and commercial company real estate and real property, tangible personal property, and intangible personal property. Part one of the series considered all of the reasons why a valuation specialist in any appraisal discipline (herein called an “appraiser”) may be retained to value the debtor company property within a bankruptcy context. This article considers what the appraiser, the client, and the client’s legal counsel need to know about the bankruptcy appraisal assignment and process. Introduction This article…
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A Conceptual Framework to Consider Real Estate Centered Business Enterprises (RECEs) commonly sell as real property going concerns with elements of real estate, personal property and a business enterprise component. Business appraisers face several challenges with these assignments due to the interdependence of the business with the other assets. Another key challenge for business appraisers with these types of assignments is relying on separately completed real estate appraisals that are frequently incorrectly developed based on an inappropriate premise of value. This article provides readers a conceptual framework to valuing these types of businesses. Real Estate Centered Business Enterprises (RECEs) commonly…
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In this article, Robert Cimasi and Matthew Wagner provide a roadmap of the valuation and legal issues valuation professionals confront valuing a medical practice that also provides ancillary and technical component (ASTC) services. The fact that the ASTC services are often integrated with the professional services of a practice does not restrict the ASTC service line from having value separate and aside from that of the practice enterprise. The authors share their views on how to value the hypothetical “carve-out” ASTC, including what approaches to consider.