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Different Ways How to Value Assets
Different Ways How to Value Assets
December 21, 2020

If you are planning to liquidate the idle assets of your business, then participating in plant auctions is a perfect way to get the best value for any of your assets. But how exactly is a machinery valuation being done before you dive into an auction? There are different ways used to determine the valuation of a certain asset. It can either be a fair value, market value or equitable value.

 

Deciding on which of them is the most suitable depends on the specific purpose of the valuation needed.    

 

For example, if it is made to determine the balance sheet value of your business asset, then the most appropriate basis should be fair value as dictated by accounting standards. If in other cases, the valuation is for the purpose of ascertaining a proposed selling price on an open market, it goes without saying that market value is a suitable basis. Finally, equitable value is the most applicable when a closed transaction or private treaty is preferred where there is an identified buyer and the seller determines the fair price. 

 

As for the method of valuation to be applied, it can either be an income approach, a cost approach, a market approach, or any combination of them. Though it may be sufficient to know which valuation basis and method is suitable, it also helps to determine the most applicable method of sale envisioned to get the most value of the assets. For instance, if a sale by plant auctions is perceived to be the greatest way to maximize the end result, a market value in-situ would be the most appropriate. This is with the assumption that a sale for individual assets is made and the method done is to seek auction sale comparables. 

 

Alternatively, if the sale of the assets through a closed transaction is considered to be a better choice, then all comparable market evidence must be acknowledged where market value ex-situ is more suitable. Ultimately, whether a private treaty or open market during plant auctions is the best approach, the most important thing to know is what it is specifically to be valued. Only then when the purpose of the valuation can be determined so that the correct basis and method are applied. 

 

If your business has assets that you would like to liquidate, get in touch with an experienced auctioneer like Infinity Asset Solutions. With a highly knowledgeable team and servicing for a variety of industries, we’ll be able to get the highest value for you through plant auctions. Contact us today for more information on our full-service asset solutions. 

 

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