It’s fair to say life as a valuer in an insolvent case has not got easier! The standard requirements remain – you will be asked to drive to an industrial estate at 4pm on a Friday afternoon, be introduced to a production manager who is understandably upset (occasionally uncooperative) as he may lose his job, be expected to understand the company’s business activity, production processes, client base, stock status including retention of title potential, schedule the machinery and office equipment, track down the vehicles, understand the hire purchase and leasing agreements that exist and… advise your client the valuation on Monday!
Please be clear, I’m not complaining; but the challenges are changing, and the future is unpredictable.
Risk seems to be the watchword in all aspects of our approach; including understanding the risk of security of assets, personal safety, protection of property, hazardous waste, disputed ownership, terminated agreements and diminishing values to name a few.
Protecting value is paramount; this could involve anything from arranging maintenance of the equipment to negotiating continuation of software agreements for computerised machines. Just as important is to do all possible to mitigate the migration of customers and at least maintain the contact; if the business ceases to trade, we will need to follow the product so we are well positioned to market the production equipment to the next manufacturer/supplier.
Data is next on the list; it’s often valuable and normally sensitive. The threat of being sued in the event of data protection laws not being adhered to is ever present; some IPs would prefer to destroy a personal computer than run the risk of the data leaking to the outside world (and why wouldn’t they given the value of a five year-old PC!). Intellectual property is a subject all to itself, but equal investment of time in protecting as well as investigating the value of data is a good move.
The risk of hazardous waste is more and more a key driver in appraising plant and equipment, especially process plant. There are many examples of paint plants and plating lines which are not that old, being rendered a liability due to the costs of purging the line and safely disposing of the chemical waste. It’s not that this issue wasn’t a factor in times past, it’s just that the costs of any kind of environmental clear up is so much more expensive. A simple example: you can buy a used six-yard waste skip for £200 – it costs £250 to hire one and have the contents disposed of (and that’s just non-hazardous landfill).
If all this isn’t enough to occupy the mind, there’s the risk of getting it wrong! As professional surveyors we operate under the auspices of the Royal Institution of Chartered Surveyors (RICS) which provides the ‘red book’ guidelines as well as an ethical steer; however, like all firms of our size, we carry very substantial professional indemnity cover. but one needs to operate in a way that doesn’t necessitate a claim. GoIndustry DoveBid adopts a risk process that does as much as reasonably possible to ensure the advice and the values are correct, and the answer is in data. Data will tell you what is selling, where it’s selling and for how much.
We can call upon our own data, which includes information from 2,000 auction sales, with 500,000 different items over the last two years, with 450,000 profiled buyers across 100 countries. It’s market evidence from the real world, and shows us trends by industry and geography. The other usual sources including the machinery dealer sector, manufacturer’s new costs, relevant government legislation and geographic variances in import/export regimes are all still necessary stopping off points to reduce the risk .
When all’s said and done, you can’t take the risk out of everything. As Harold Macmillan once said, “To be alive at all involves some risk.”
Hopefully our profession continues to be one in which exhaustive diligent research plus experienced opinion provides the best answer possible, and that is the one accepted by the client. But just in case, better keep the PI cover going!
For further information:
Neil Smith AssocRICS
A Liquidity Services Marketplace
+44 117 3445746 Direct
+44 117 9220790 Office
+44 7748 761597 Mobile
+44 117 3445150 Fax