Asset valuations play an integral role in helping your business enhance asset management, make educated business decisions, manage risk, and meet reporting requirements. Valuation is also a specialised process that requires market, industry, and asset expertise. Because valuation is a non-core business function, most organisations lack the time and resources required to effectively value their assets.
The best solution is often to enlist a trusted valuation provider, but what criteria should your ideal partner meet? Your partner must understand your business and the market for your assets. But it should go beyond these basic requirements and partner with you consultatively to expertly analyse market data, provide a comprehensive asset management solution, and be transparent and accountable.
This white paper presents seven key criteria your organisation should require in an asset valuation partner. A provider that meets these requirements will ensure your organisation extracts maximum value from asset valuations, helping you make strategic decisions and achieve key business goals.
- Supplements Data with Expert Analysis
To deliver a winning valuation, your partner must possess not only superior data but the expertise to analyse it. A professional valuation provider will appraise your assets primarily based on market data from similar assets, as this data is the strongest indicator of value. But your partner should also expertly interpret this information by making allowances for dealer markups, warranty values, asset conditions, and other factors.
By observing historical sales, profitability, open orders, and other types of data, your partner can produce a serviceable valuation. Only through experience-driven analysis can it deliver a best-in-class appraisal.
2. Uses Multiple Methods to Value Assets
While your provider should base its valuations on market data whenever possible, in some situations this information may not be available. Look for a resourceful provider that can leverage other methods if needed to deliver an accurate valuation.
There are several ways a skilled provider can value your assets:
- Determine the cost of your assets new, then apply depreciation factors to arrive at values. This is the “cost approach.”
- Multiply the income or profits derived from your assets
- Tap industry connections to corroborate your assets’ values based on similar assets and market trends
- Observe what similar assets are selling for on its online marketplaces
An experienced provider will deliver an accurate valuation regardless of availability of market data.
3. Provides a Comprehensive Asset Management Solution
Valuation is just one aspect of your reverse supply chain. Post-valuation, your surplus assets should be redeployed internally, resold in secondary markets, or disposed of in an environmentally friendly manner. An expert valuation partner will provide comprehensive solutions spanning your entire reverse supply chain. Look for a partner that offers software to facilitate the asset management process throughout your organisation. This software should provide complete visibility into all surplus across all your locations, empowering you to more effectively execute every stage of your asset management program. Also choose a partner that can leverage a wide range of marketing and sales strategies to sell your surplus assets to the right buyers for the highest recovery value.
4. Meets Tight Deadlines
In certain circumstances, such as facility closures, your assets must be valued and sold in a timely manner. Select a partner that can deliver accurate, thorough valuations within tight timelines. An experienced provider will work within your timeframes to efficiently inventory and appraise your assets. It will have the experience needed to quickly solve any challenges and make allowances for time to remove and sell assets. Ideally, your valuation provider can also facilitate resale and redeployment, saving you time and money by handling the entire asset management process.
5. Is Committed to Transparency and Accountability
Your valuation provider must have sterling ethics and professional standards. Make sure your partner is transparent with its processes and discloses any potential challenges, such as relying highly on advance rates. Look for a provider that belongs to respected industry organisations such as the American Society of Appraisers and the Royal Institution of Chartered Surveyors. Also ensure your provider will deliver a detailed valuation report and provide back-up upon request.
6. Understands How to Value Intangible Assets
An experienced provider will be able to appraise a wide range of intangible assets, whether related to marketing (e.g. trademarks, brands, web domains), customers or suppliers (e.g. customer lists), or technology (e.g. patented technology).
Your provider should understand that a traditional market approach may not be optimal for these types of assets and consider other options such as these:
- Cash Flow Valuation: Through the use of discounted cash flow methods, this income practice uses a marginal cash flow figure to ascertain the present value of your assets’ future economic benefits
- Cost Approach: This method values your intangible assets by assessing the cost to “build” them from scratch, making allowances for obsolescence, maintenance, and inflation.
7. Solves Your Trade Compliance Challenges
A strategic partner will add value by mitigating all potential compliance risks associated with the management, valuation, and sale of surplus assets. For instance, many countries have laws restricting sales within specific asset categories or to certain countries, individuals, and entities. And assets with sensitive data need to be wiped before being sold. Your provider should integrate its compliance team
into your valuation program to ensure you comply with international trade, data privacy, financial, health and safety, environmental, and all other applicable regulations and procedures, including your internal policies.
From mergers and acquisitions to required financial reporting, asset valuations help you meet a wide range of business challenges. Selecting the right valuation partner will ensure you maximise value from these and other scenarios. This white paper has provided you with seven critical criteria to look for in a valuation provider. A superior partner will go beyond delivering an accurate valuation and provide expert analysis, flexibility, transparency, compliance services, and comprehensive solutions.
Liquidity Services (NASDAQ: LQDT) employs innovative e-commerce marketplace solutions to manage, value, and sell inventory and equipment for business and government clients. We operate a network of leading e-commerce marketplaces that enable buyers and sellers to transact in an efficient, automated environment offering over 500 product categories. Our superior service, unmatched scale, and ability to deliver results enable us to forge trusted, long-term relationships with over 10,000 clients worldwide. With nearly $7 billion in completed transactions, and 3 million buyers in almost 200 countries and territories, we are the proven leader in delivering smart commerce solutions. Visit us at LiquidityServices.com.