New industry standard for equipment valuation
EquipmentWatch, a data provider in asset valuation for the equipment finance industry, now offers Orderly Liquidation Values (OLV) for construction, lift and access, and agricultural equipment as part of its existing values solution. This new valuation benchmark answers a call in the market for a standard, objective third-party OLV that accurately adjusts for equipment usage.
Determining an OLV Standard
EquipmentWatch has been the industry’s source for fair market values (FMV) and forced liquidation values (FLV) since 1958. In determining these values, analysts leverage distinct transactional data sets in each channel. This data-driven approach to valuation accounts for macro trends in the market, while also giving proper weight to individual asset considerations of location, usage and condition. As a hybrid value without a distinct sales channel, OLVs were traditionally omitted from EquipmentWatch Values.
“We saw a lot of market confusion about the definition of an OLV,” said Garrett Schemmel, VP and Market Leader for EquipmentWatch. “Our customers need an unbiased, defensible valuation that includes critically important adjustments for usage, location and condition of an asset.”
In establishing a standard, the EquipmentWatch team conducted a thorough survey of the industry. It quickly became clear that no standard method of OLV calculation existed. “OLVs represent a liquidation value when sellers have time and resources to find buyers, but unfortunately there’s no consensus in the industry of how an OLV should be derived,” said Sam Giffin, Director of Business Insights for EquipmentWatch. “We found that by anchoring the OLV adjustment to FLV, we were able to find a generally-acceptable midpoint around which an OLV could be derived. From there we determined specific adjustment factors for individual subtypes and models. The result is 156 unique equipment type-specific OLV factors, ranging from 110 percent to 147 percent of FLV.”
Providing Flexibility Where Needed
Even with a confident OLV benchmark, EquipmentWatch recognized that companies may have existing OLV adjustments that better reflect each particular market. To serve these customers, EquipmentWatch built in controls to the application and API that allow the user to set their own OLV adjustment based on FLV or FMV. This method combines the precision of EquipmentWatch values and adjustments with in-house expertise in order to create the best possible OLV.
A Better Way to Value Equipment
By establishing a standard, data-backed approach to OLV determination, EquipmentWatch has provided a metric that can be used to reduce risk in all equipment finance situations. All current subscribers of EquipmentWatch Values now have access to OLVs at no extra charge. Learn more about EquipmentWatch Values at this site.
EquipmentWatch is a trusted source for heavy equipment data and intelligence. EquipmentWatch produces database information products for the construction equipment industry. The firm provides heavy construction research and serves more than 15,000 professional, high-volume users of construction and lift-truck data. The firm’s products are used as tools in decisions surrounding the purchase, valuation, operation, and disposal of equipment.
For nearly 50 years, EquipmentWatch has served contractors, equipment manufacturers, dealers, rental companies, lenders and insurers, and government agencies involved in heavy civil construction.