Whichever side you are on in a new car dealership buy/sell transaction, an FF&E (Furniture, Fixtures and Equipment) appraisal will help with your negotiations.
The peace of mind in knowing accurate and current values is only one of the benefits a well-organized asset appraisal report will provide. A current appraisal of the equipment can be a tool to justify the asking price of the business. If a buyer is looking for a business acquisition loan, the lender will want an appraisal on the equipment for collateral purposes. Once the buy/sell transaction is complete, a working inventory with complete descriptions will aid with accounting. This information will provide current Fair Market Values to the equipment which can be used to set up a new asset and depreciation schedule.
The USPAP (Uniform Standards of Professional Appraisal Practice) is the accepted guide for appraisal standards in the United States. This resource for appraisers gives straightforward definitions of the terminology used by appraisers in order to make valuations consistent. The main focus within this guide is ethics. More than just accepting the definition of the differing levels of appraisal an appraiser must not engage in any appraisal for assets that are beyond their knowledge. It is important therefore to seek out appraisers with a thorough background in the assets being appraised.
Buy/Sell transactions generally require a “Fair Market in Continued Use” appraisal as defined by the USPAP. While auctioneers are experts in liquidation values, they also have a working knowledge and understanding of Fair Market Values, including costs of installation. Auctioneers who specialize in valuations of new car dealerships are very detailed appraisers due to a “hands on knowledge” of the inventory. In order to successfully liquidate a business, an auctioneer must know the value of all equipment within the dealership. An equal amount of effort is given to both high and low dollar equipment. This attention to detail provides the best outcome for liquidations and this knowledge and attention to detail translates directly into our appraisal work.
Another benefit gained is an expertise in regard to age, condition, voids in the inventory and relevance to the business. What assets are obsolete? What assets are missing? An experienced appraiser in the automobile industry will have those answers for you. This combination of product knowledge and attention to detail brings a great deal more to your appraisal report than just dollar values.
If you are involved in a buy/sell transaction, please call us for a free consultation.
Next Up: Ethics for equipment appraisers and auctioneers.