How we arrive at a number.
An equipment appraisal is an independent, USPAP-compliant opinion of value. This page explains what that means: the standard we work to, the three approaches to value, the premises of value, and what is in the report that lands on your desk.
The standard
What a USPAP appraisal is.
A USPAP appraisal is an opinion of value developed and reported under the Uniform Standards of Professional Appraisal Practice, the framework that governs credible appraisal work in the United States. USPAP sets how an appraiser defines the assignment, gathers and analyzes data, selects an approach, and discloses assumptions, so the conclusion is independent, supportable and repeatable.
That discipline is the difference between a number and a defensible number. A USPAP-compliant Machinery & Equipment (M&E) appraisal states its premise of value, its effective date, and the reasoning behind every figure, which is exactly what a lender, the SBA, the IRS, an auditor or a court needs to rely on it.
- Independent: an opinion of value, not an advocacy number for one side of a deal
- Defined assignment: the intended use, intended users, premise and effective date are stated up front
- Documented: data sources, methodology and assumptions are written down and disclosed
- Certified: prepared by a NEBB-certified Machinery & Equipment Appraiser (CMEA), with senior review before it leaves
- Defensible: built to withstand lender, SBA, IRS, audit and legal review
The three approaches
Three ways to test a value. We reconcile them.
USPAP recognizes three approaches to value. A certified appraiser develops the ones the assets and the assignment support, then reconciles them into a single conclusion, rather than leaning on any one in isolation.
Cost approach
Start from the cost to replace an asset with new, like-utility equipment, then deduct for age, wear and obsolescence. It anchors value for specialized or rarely traded machines, and it underlies Replacement Cost New for insurance.
Market approach
Compare the asset to recent sales of comparable equipment in the relevant resale market, adjusting for age, hours, condition and configuration. It is the strongest evidence where an active secondary market exists.
Income approach
Where assets produce measurable income, value the earnings they generate. It applies to revenue-producing equipment and integrated lines, and it is reconciled against the cost and market evidence.
The premises of value
Same equipment, different premise, different number.
One machine can carry several values at once, because the premise of value depends on the situation: a sale, a loan, a wind-down, an insurance schedule or a tax filing. We determine the correct premise for your assignment and defend it. These are the premises an M&E appraisal uses.
Fair Market Value
The price a willing buyer and a willing seller would agree on, with neither under compulsion and both reasonably informed. The premise for sales, acquisitions, financial reporting, estate and tax work.
Orderly Liquidation Value
The proceeds from a privately negotiated sale of the assets advertised over a reasonable selling period. A common basis for lending collateral coverage.
Forced Liquidation Value
The proceeds from a sale under compulsion, typically a public auction, where the seller must act. The conservative floor used in wind-downs and recovery analysis.
Net Orderly Liquidation Value
Orderly Liquidation Value after the costs of sale, removal and disposition are removed. The net figure a workout or asset-based lending team can lend against.
Replacement Cost New
The current cost to replace an asset with a new one of like utility, before deduction for age or wear. Sets insure-to-value limits and supports agreed value.
Effective date
Every premise is measured as of a specific date. Values move, so the report fixes the effective date and supports the conclusion with the market evidence that applied then, including retrospective dates for estate and litigation work.
Anatomy of the report
What lands on your desk.
You receive a complete report, not a printout. It is built in three parts so a reader can move from the conclusion to the evidence behind any single asset without leaving the file. The same structure supports a credit memo, a tax return, an insurance schedule or an exhibit at trial.
- The narrative: the assignment, intended use and users, the premise and effective date, the approaches applied, and the assumptions and limiting conditions, all stated in writing
- The itemized appendix: each asset identified and valued on its own line, so any figure can be traced and tested
- The photographs: images from inspection that document condition and tie each value to a real, identified asset
- The certification: the USPAP certification and the appraiser's credentials, with senior review confirmed before delivery
How an engagement runs
From request to defensible report.
The path is the same whether the work is a desktop appraisal from your photos and records or an on-site inspection across multiple locations. We confirm scope before we begin, and no value is quoted before inspection.
Scope the assignment
You share the asset list, photos and the reason for the appraisal. We confirm the intended use, the premise and the effective date, and whether the work is desktop or on-site.
Inspect and analyze
A certified appraiser inspects the assets, gathers market and cost data, and applies the cost, market and income approaches, reconciling them into one conclusion.
Senior review
Every report is reviewed before it leaves. Premise, data, methodology and assumptions are confirmed against the assignment and USPAP.
Defensible report
You receive the narrative, the itemized appendix and the photographs in one file, built to hold up to lender, SBA, IRS, audit and legal review.
Who does the work
Certified, independent, and fluent in how the file is read.
Every appraisal is prepared by a certified appraiser and held to USPAP. Jared Lukes leads the appraisal work. Jesse Lukes came up inside the bank at BMO, originating loans and reviewing collateral, so the file is built the way the people who rely on it actually read it. That combination, technical M&E expertise and lender fluency, is what makes the number hold.
- USPAP-compliant on every assignment, regardless of premise or intended use
- NEBB-certified Machinery & Equipment Appraiser (CMEA)
- Independent of the deal, the lender and the parties
- Senior review on every report before delivery
Common questions
Answers, up front.
What is a USPAP appraisal?
A USPAP appraisal is an opinion of value developed and reported under the Uniform Standards of Professional Appraisal Practice. USPAP requires the appraiser to define the assignment, analyze the data, select and reconcile the approaches to value, and disclose assumptions, so the conclusion is independent, documented and defensible for the lender, the SBA, the IRS, an auditor or a court.
What is the difference between the cost, market and income approaches?
The cost approach starts from the cost to replace an asset with new, like-utility equipment and deducts for age, wear and obsolescence. The market approach compares the asset to recent sales of comparable equipment. The income approach values the earnings revenue-producing assets generate. A certified appraiser develops the approaches the assets support and reconciles them into one conclusion rather than relying on a single method.
What is the difference between FMV, OLV, FLV, NOLV and RCN?
They are premises of value for different situations. Fair Market Value (FMV) is the price a willing buyer and seller would agree on, used for sales and tax. Orderly Liquidation Value (OLV) is the proceeds from a negotiated sale over a reasonable period. Forced Liquidation Value (FLV) is the proceeds under compulsion, such as an auction. Net Orderly Liquidation Value (NOLV) is OLV after the costs of sale. Replacement Cost New (RCN) is the cost to replace an asset with new, used for insurance.
What is in the report?
Three parts in one file: a written narrative stating the assignment, premise, effective date, approaches and assumptions; an itemized appendix that identifies and values each asset on its own line; and photographs from inspection. It carries the USPAP certification and the appraiser's credentials, and it is reviewed by a senior appraiser before delivery.
What is the difference between a desktop and an on-site appraisal?
A desktop appraisal is developed from the asset list, photographs and records you provide. An on-site appraisal adds a physical inspection across one or more locations. Both are USPAP-compliant; the right one depends on the assets, the intended use and what the reviewing party requires. We confirm which fits when we scope the assignment, and we never quote a value before inspection.