Montrose Global Assets Inc.Montrose Global Assets Inc. InspectionsInspections AppraisalsAppraisals

Types of AppraisalsTypes of Appraisals-USPAP Appraisals-USPAP Appraisals

-Which Kind of USPAP appraisal do you need?-Which Kind of USPAP appraisal do you need?

Types of Appraised ValuesTypes of Appraised Values

--Which value do you need?Which value do you need? Loan Balance vs. LiquidationLoan Balance vs. Liquidation

InspectionsInspections

Sarbane-Oxley ComplianceSarbane-Oxley ComplianceGAAPGAAPFASB 13FASB 13

You Need an Inspection if You You Need an Inspection if You Want to:Want to:

Confirm that your collateral is on Confirm that your collateral is on site, orsite, or

Confirm that your collateral is in Confirm that your collateral is in good condition, orgood condition, or

To Send a Message That:To Send a Message That: You are out there, andYou are out there, and You are watching them.You are watching them.

Order an Inspection!Order an Inspection!

Steps to Make an Equipment Steps to Make an Equipment Inspection Happen:Inspection Happen:

1-Inform the Customer:1-Inform the Customer:

• It is time for a routine inspectionIt is time for a routine inspection• Your equipment inspector will be calling Your equipment inspector will be calling

to arrange a mutually convenient timeto arrange a mutually convenient time• Ask the customer who the inspector Ask the customer who the inspector

should callshould call• Tell him/her the inspector will require a Tell him/her the inspector will require a

brief tourbrief tour• Assure the customer that the inspection Assure the customer that the inspection

will not be disruptivewill not be disruptive

2- Inform Montrose2- Inform Montrose

• You want the inspectionYou want the inspection• The customer is expecting our callThe customer is expecting our call• Discuss fee and timing with Montrose Discuss fee and timing with Montrose

Global Assets Inc.Global Assets Inc.

3- Provide Montrose With3- Provide Montrose With::

• An equipment ListAn equipment List Make, model, S/N of each piece of Make, model, S/N of each piece of

equipment, counts and descriptions.equipment, counts and descriptions.• Exact Location (address) of equipment Exact Location (address) of equipment • Contact #’s Contact #’s • The reason for inspection The reason for inspection • A description of anything extra you want A description of anything extra you want

us to look for:us to look for: Senior people still on staff?Senior people still on staff? Employee moral?Employee moral? Activity?Activity?

4 Provide Montrose with the 4 Provide Montrose with the Inspectors answer to:Inspectors answer to:

• ““Why are you here?” OrWhy are you here?” Or• ““Who are You?”Who are You?”

Inspection vs. AppraisalsInspection vs. Appraisals

AppraisalsAppraisals

Sarbane-Oxley ComplianceSarbane-Oxley ComplianceGAAPGAAPFASB 13FASB 13

You need an appraisal if you want to:You need an appraisal if you want to:

Know the dollar amount that could be Know the dollar amount that could be recovered by selling the assetsrecovered by selling the assets

The sale strategy best suited to these The sale strategy best suited to these assetsassets

ValuationValuation Residual ValueResidual Value Forced Liquidation ValueForced Liquidation Value Orderly Liquidation ValueOrderly Liquidation Value

Then Order an Appraisal!Then Order an Appraisal!

What is an Appraisal?What is an Appraisal?

An appraisal is a formal estimate of An appraisal is a formal estimate of an asset value under various an asset value under various liquidating conditions. liquidating conditions.

It must comply with the Uniform It must comply with the Uniform Standards of Professional Appraisal Standards of Professional Appraisal Practice (USPAP), promulgated by the Practice (USPAP), promulgated by the Appraisal Standards Board.Appraisal Standards Board.

Types of USPAP Appraisals:Types of USPAP Appraisals:(by scope of appraisal)(by scope of appraisal)

A Complete AppraisalA Complete Appraisal• All assets of the business are appraised- All assets of the business are appraised-

tangible and intangibletangible and intangible

A Limited AppraisalA Limited Appraisal• Only certain assets are appraised- the Only certain assets are appraised- the

M&E, the Real Estate, the Inventory, or M&E, the Real Estate, the Inventory, or the Tangible assetsthe Tangible assets

By Details Reported in AppraisalBy Details Reported in Appraisal

A- Self Contained Appraisal ReportA- Self Contained Appraisal ReportDescribes in detail the methods, analysis, Describes in detail the methods, analysis,

logic, etc.logic, etc. B- Summary Appraisal ReportB- Summary Appraisal Report

Summarizes the methods, analysis, logic, Summarizes the methods, analysis, logic, etc.etc.

C- Restricted Appraisal ReportC- Restricted Appraisal ReportStates the methods, analysis, logic, etc. – States the methods, analysis, logic, etc. –

Also warns that there is not enough information Also warns that there is not enough information for a third party to understand the reportfor a third party to understand the report

Desktop AppraisalDesktop Appraisal

Performed without an inspection by Performed without an inspection by appraiser or his/her designated appraiser or his/her designated inspectorinspector

Considered less reliable than if Considered less reliable than if inspected firstinspected first

Appraisal must state that the assets Appraisal must state that the assets were not inspectedwere not inspected

Benefits of an Appraisal over an Benefits of an Appraisal over an inspectioninspection

Characterization of OperationsCharacterization of Operationsdead, picking up, etc.dead, picking up, etc.

Insights About the Company, Insights About the Company, Customers and Key EmployeesCustomers and Key Employees

Types of Appraised ValuesTypes of Appraised Values

Fair Market ValueFair Market ValueUseful if business is being soldUseful if business is being sold

Orderly LiquidationOrderly LiquidationWhat could be recovered in 3 or 4 monthsWhat could be recovered in 3 or 4 months

Forced Liquidation ValueForced Liquidation ValueWhat could be recovered from an auction What could be recovered from an auction

sale, Sale Period- Up to two monthssale, Sale Period- Up to two months

Benefit of an Appraisal ReportBenefit of an Appraisal Report

The appraiser can provide insight The appraiser can provide insight throughthrough

• Direct ObservationDirect Observation• ConversationsConversations• Your Eyes and EarsYour Eyes and Ears

Direct ObservationDirect Observation

MaintenanceMaintenance Dismantled EquipmentDismantled Equipment Idle EquipmentIdle Equipment Equipment in StorageEquipment in Storage

Conversations with:Conversations with:

Senior personnel about:Senior personnel about:• CompetitorsCompetitors• Major CustomersMajor Customers• SalesSales• The IndustryThe Industry

Workers about:Workers about:• Recent LayoffsRecent Layoffs• General toneGeneral tone

Mechanics of Having Mechanics of Having Montrose Conduct an Montrose Conduct an

Inspection or Perform an Inspection or Perform an AppraisalAppraisal

Steps to Make an Equipment Steps to Make an Equipment Appraisal Happen:Appraisal Happen:

1-Inform the Customer:1-Inform the Customer:• It is time for a “routine” appraisalIt is time for a “routine” appraisal• The appraiser will call to schedule his visitThe appraiser will call to schedule his visit• He/she will ask aboutHe/she will ask about

Maintenance policies. Usage, Upgrades, Repairs etc.Maintenance policies. Usage, Upgrades, Repairs etc.

Therefore he must speak to a person Therefore he must speak to a person knowledgeable of the equipment knowledgeable of the equipment

• The appraiser will require a tourThe appraiser will require a tour• The appraiser will take digital photographs of The appraiser will take digital photographs of

the equipment AND the serial numbers.the equipment AND the serial numbers.• The appraiser will not be disruptiveThe appraiser will not be disruptive

2- Inform Montrose:2- Inform Montrose:

• You want an appraisalYou want an appraisal• The customer is expecting our callThe customer is expecting our call• Discuss a fee with Montrose Global Assets IncDiscuss a fee with Montrose Global Assets Inc• Alert Montrose so that we can plan ahead to Alert Montrose so that we can plan ahead to

minimize travel costs:minimize travel costs: Inform us ASAP with the equipment info you have so Inform us ASAP with the equipment info you have so

that we can start the research before we go. The that we can start the research before we go. The minimum information required is the make, model, minimum information required is the make, model, serial number and description of the equipment. If serial number and description of the equipment. If original cost, year of acquisition, accessories and original cost, year of acquisition, accessories and installation cost are available, that would be valuable.installation cost are available, that would be valuable.

Comparison of Outstanding Loan Comparison of Outstanding Loan BalanceBalance

Fifteen year schedule with straight line Fifteen year schedule with straight line depreciationdepreciation

Change in OLV of standard, popular machineryChange in OLV of standard, popular machineryInitial drop in value, then gradual decline with age and Initial drop in value, then gradual decline with age and

condition, then levels offcondition, then levels off Change in OLV of custom , special purpose Change in OLV of custom , special purpose

machinerymachinerySevere initial drop in value, then relatively stable until Severe initial drop in value, then relatively stable until

condition changes or new process appearscondition changes or new process appears Change in OLV of certain high tech machineryChange in OLV of certain high tech machinery

Severe initial drop in value, then relatively stable until new Severe initial drop in value, then relatively stable until new technology appearstechnology appears

Comparison of Outstanding Loan Comparison of Outstanding Loan Balance to Liquidation ValueBalance to Liquidation Value

Loan to Value Comparison General Purpose Equipment

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Loan to Value Comparison Furniture

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The Lender's DreamPrinting Presses

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