Education Centre. Download FREE Reports.

Learn the basics of Machinery & Equipment Appraisal Download our special report:
The Essentials of Machinery and Equipment Appraisal:  Unlocking True Asset Value.

We also have a series of specialized  reports that focus on the needs of specific advisors or users.

Do you or your clients need to understand how small businesses are valued?
Download Small Business Values Demystified: How we Determine the Value and Goodwill.

Are you a Lender or Commercial Landlord who is concerned about collateral that may be backing one of your agreements?
Download Eroding Assurances:  How the 6 Stages of Business Failure Jeopardize Lender and Landlord Security.

Are you a Business Broker, Loan Broker, or Economic Development Officer?
Download Unlocking Small Business Financing in Canada: A guide for Loan, Mortgage and Business Brokers.

Are you a Commercial Real Estate Agent?
Download Rental Revenue Rescue:  How Real Estate Agents & Landlords can Recover from Sudden Tenant Closures.

Common Questions About Certified Machinery and Equipment Appraisals.

What does a USPAP-compliant Certified Machinery & Equipment Appraisal (CMEA) report actually look like?

It is a formal valuation document that follows USPAP standards and includes: scope of work, intended use/user, methodology, asset list with individual values, photos, market research, comparable sales, condition notes, assumptions and limiting conditions, appraiser credentials, signed certification, and final value conclusion. Most of ALP’s reports are 30-100 pages long.

How is a certified CMEA report different from a value letter from an equipment dealer or auctioneer?

A dealer letter is an opinion, usually tied to resale values being seen in the local market. A CMEA is an independent, defensible valuation supported by research and compliant with USPAP. The outcome of the CMEA can vary substantially from what a dealer’s opinion may be, based on the user’s requirements for the definition of value. For example, Fair market value (there are three variations), Orderly Liquidation Value, and Forced Liquidation (again, several variations). Lenders, courts, and authorities accept certified appraisals—dealer letters are usually not accepted.

What is a “Restricted Appraisal Report,” and when is it appropriate to use this type of report instead of a longer narrative report?

It is a shorter valuation format intended for one specific user. It contains conclusions but less narrative detail. It is appropriate when the user fully understands the subject asset and only needs a value, not the full research discussion. Common for internal planning or renewals, or when reports are delivered directly from the appraiser to the intended user with no intermediary.

What does “Fair Market Value in Continued Use” mean, and why is that the most common value standard you report on?

It represents the price of equipment if kept in operation, installed, and used as part of a working business. It’s most common because lenders underwrite the value of equipment as part of an active, revenue-generating enterprise rather than liquidation. It can also include freight, delivery, and installation ‘soft costs’ which hold value only if the equipment continues to function in its current location. There are other varieties of Fair Market Value, including FMV-Removed and simply FMV for equipment that is movable by design.

What other types of value can you report—such as Orderly Liquidation, Forced Liquidation, Salvage or Scrap—and when would a lender or owner ask for those?

Orderly Liquidation Value (OLV): sale over a reasonable marketing period — often for restructuring.

Forced Liquidation Value (FLV): quick sale at auction — often requested by lenders for downside risk.

Forced Liquidation Value- In Place: quick sale en bloc to a single buyer with a strict deadline.

Salvage/Scrap: metal value only — when equipment is obsolete or irreparable.

Different stakeholders request different standards based on the scenario and risk tolerance.

Why can’t we just use book value, tax depreciation, or insurance values instead of commissioning a certified equipment appraisal?

Book values follow accounting rules, not market reality. Tax depreciation is artificial and may under- or overstate value. Insurance values are often replacement cost, not fair market value. Only a CMEA quantifies the real-world selling price or theoretical value based on circumstances envisioned by the possible selling scenarios that make sense to the user of the report.

What information do you need from me to begin an appraisal (equipment list, photos, site address, contacts, user, etc.)?

Ideally: equipment list, make/model/serials, photos, hours/mileage, condition notes, site address, operational status, safety protocols, and a contact on-site. If needed, we help you gather missing information via a site visit. A basic list of major items is needed to produce a cost estimate.

What if we don’t have an equipment list or detailed serial numbers—can you still complete a certified appraisal?

We can still complete the appraisal. We may conduct a site visit to document assets or guide you to build a site survey. Missing data affects certainty, but we can proceed with disclosure.

How much does a certified machinery & equipment appraisal cost, and what factors influence your fee (location, number of items, urgency, etc.)?

Fee depends on the number of capital assets (major items), travel, urgency, required value standard (some users want more than one definition of value), site access, and whether a visit is required. Simple desktop assignments cost less; on-site multi-facility manufacturing engagements cost more.

How long does it usually take from engagement to delivery of the final CMEA report?

Typical turnaround is 2–4 weeks from engagement, depending on complexity and data availability. Rush options are available. Simple small jobs (ie, a restaurant, auto repair shop, etc.) can be done in a week normally.

Do you need to come on-site and physically inspect the equipment, or can the appraisal be done using client-supplied photos, video, and documentation?

Not always. Desktop reports can be completed with reliable photos, video walkthroughs, and documentation. On-site inspection is required when verification or condition assessment is critical. If the report is for a bank loan, the lender may require that we visit the site to guarantee the presence of the items.

What are my responsibilities during the site visit (access, safety procedures, staff available for questions, etc.)?

Provide safe access, ensure equipment is accessible, arrange a knowledgeable staff member for questions, and communicate any hazards or shutdown times. We handle documentation and photography.

Can you appraise leased equipment or items that the operating company doesn’t legally own, and how is that handled in the report?

Yes, we can if asked. We identify ownership clearly and separate owned from leased assets. Values are still provided, but with disclosure that the item is leased. We often do this if a buyout of leased equipment is contemplated in a business refinancing, for example.

How long is an equipment appraisal considered “current” or acceptable for lenders and other users before it should be updated?

Most lenders accept reports for 90 days, depending on market stability. If conditions change materially, an update may be required.

Can the same appraisal report be shared with multiple stakeholders (bankers, landlords, investors, accountants, lawyers), or is it restricted to a specific intended user and purpose?

An appraisal report is restricted to one user. If you share a copy with other stakeholders, they may require the report to be addressed to them so they can use it confidently. We are also required to disclose if we have appraised the equipment before. For example, if we are hired to appraise the equipment on January 1 for Bank A, and then we are asked to produce a report on February 1 for Bank B, then the report to Bank B will disclose that we appraised the assets on January 1 for Bank A.

Why is my banker or commercial landlord asking for a certified machinery & equipment appraisal as part of a financing, renewal, or lease negotiation?

To verify collateral support, loan-to-value ratios, refinancing risk, and asset coverage in case of default. For landlords, valuation helps negotiate deposits or lease security since many commercial leases require the business assets to stand as part of the collateral towards the long-term liability over the life of the lease.

How does a CMEA report help lenders understand and manage collateral risk over the life of a loan facility?

It gives them a defendable value for recovery scenarios, sets a benchmark for depreciation, and supports lending decisions across the loan lifecycle. It also serves as an important document for an update to the appraisal later if the loan should fall into default and need to be updated.

What market conditions (interest rates, industry trends, demand for used equipment) do you consider when estimating value?

Auction trends, supply/demand cycles, global used-equipment markets, operational condition, relocation cost, installation, and industry-specific outlook. Some or all of these items may affect the theoretical values delivered under different scenarios. For example, under a Fair Market Value- In Continued Use scenario, the installation and freight costs will add to the value of the item. Under an Orderly Liquidation Value, the freight and disassembly costs will be removed from the item’s value.

What exposure time or marketing period do you assume when you estimate Fair Market Value in Continued Use?

Typically, a reasonable marketing period—often 60–180 days, depending on asset type and market liquidity. This is stated in the report and can vary depending on the rarity or complexity of the equipment. A pickup truck might be assumed to be sellable in under 30 days, while a dredging barge may take 18-24 months.

Are your certified appraisals accepted by courts, tax authorities, and other professional users such as accountants and legal counsel?

Yes. USPAP-compliant certified reports are recognized by courts, government agencies, lenders, accountants, and legal counsel. ALP Ltd. appraisers have given testimony for the New Brunswick Court of King’s Bench in the past.

How does a machinery & equipment appraisal fit together with a small business valuation or goodwill calculation for a share or asset sale?

Equipment value is part of the tangible asset base. Business valuation then assesses cash flow, goodwill, intangible assets, and earning power. Both are required for accurate purchase price allocation.

Who typically needs a small business valuation, and when should it be done relative to the equipment appraisal in a purchase or sale transaction?

Buyers, sellers, partners, investors, and legal stakeholders. Equipment appraisal typically occurs before or alongside valuations tangible value can be separated from goodwill. Often, the appraisal is initiated by a buyer of a business for the purposes of securing an asset-based loan from a bank or other lender.

Can a CMEA report be used for purposes beyond financing, such as shareholder disputes, divorce, succession planning, or insurance review?

Yes. Certified valuations are valid for internal planning, litigation, buyouts, inheritance, partnership exit, and risk review—not just financing. They are often the only reliable measure of small business value if the business is not profitable or if the business has been managed in a way to obscure or avoid demonstrating taxable income.

What kinds of industries and asset classes do you commonly appraise (for example: manufacturing plants, wineries, woodworking shops, restaurants, transportation fleets, etc.)?

Manufacturing plants, woodworking shops, wineries, breweries, food processing, restaurants, machine shops, automotive & transport fleets, agriculture, retail, hospitality, printing, construction, and more. The only condition for our appraisals is that the machinery or equipment be used in a way that earns a business money. This means we cannot appraise things with a collectible value, such as artwork or memorabilia. We are not licensed to appraise real estate.

What are the main limiting conditions and assumptions in a Restricted Appraisal Report that I should understand before relying on the value conclusion?

It includes fewer supporting details, relies on provided data, is intended for a single user, and may not be suitable for external stakeholders. It is valid — but less portable than a full narrative appraisal. The reason that machinery and equipment appraisals use this format is that the full narrative appraisal format is impractical, as many reports cover dozens to hundreds of items. Including examples and data for each item would result in an enormous cost and a voluminous report. All data that supports the appraisal is maintained by the appraiser in their files and can be made available for review if the document comes under review for any reason.