Our Insurance Valuation team collaborates with our internal multi-disciplinary professionals to provide the value analyses and fresh independent opinions to fiduciaries, financing sources and investors for public and private company transactions.
Independent Insight for Value Opinions
Insurance companies and their clients engage Marshall & Stevens to provide independent opinions of value of machinery, equipment, vehicles, furniture, fixtures, buildings and improvements for insurance placement and dispute purpose.
From observatories to historic churches, pulp mills and manufacturing plants to retail distribution centers, our team is called upon to provide analyses for a wide range of assets and properties.
Replacement Cost New can mean many things depending on the policy. Most policies insure to the standard definition of Replacement Cost New, meaning the subject property can be replaced with assets with near equivalent utility.
Reproduction Cost New is often the standard for custom properties, historic buildings, and older properties where new technology exists. Reproduction Cost New is the cost of replicating an exact replica of the property. In either case exclusions can be deducted as specified in the policy.
Fixed Assets
We like to discuss the use, service, and maintenance of the assets with your facility manager so that we gain an appreciation for the useful life and condition of the assets – two considerations that greatly affect the value of assets. We can also clean up the asset list so that you are not insuring assets no longer in use. An asset list cleanup may also reduce your property taxes.
Industries Served:
- Agriculture
- Automobile, Truck, and Bus Manufacturing and Assembly operations
- Broadcast, Entertainment, and Telecom
- Construction
- Education
- Energy Generation and Distribution
- Food Service and Production
- Government
- Healthcare and Medical Facilities
- Hospitality
- Manufacturing Plants including Chemical Plants, Paper Mills, Steel Mills, etc.
- Material Handling
- Mining and Oilfield
- Religious Institutions
- Research and Technology
Combination and Efficiency
Clients oftentimes engage us to perform valuation analyses for multiple purposes at the same time, gaining efficiencies by having us produce insurable value analyses at the same time as cost segregation analyses, property tax analyses, ghost asset analyses (fixed asset cleanup), purchase price allocation and/or collateral lending analyses.
Consulting
Consider us a trusted resource. We provide valuation consulting from before assets are acquired, before insurance policies renew, during the renewal process and, on occasion, after an insurable loss.
How Marshall & Stevens can help with Insurance Valuation
Frequently Asked Questions
Can you provide appraisals of my IP, real estate, and fixed assets for financing, insurance placement, property tax dispute, etc.?
We work with our clients and their financial institutions, investors, insurance companies, and other trusted advisors to provide the independent value opinions they require.
Can one firm provide liquidation value, fair value, fair market value, and insurable value of the same assets or do I have to engage multiple firms?
Upon request, we provide diverse value opinions for the same assets based upon the purpose and standard of value to efficiently accommodate the need for financing, financial reporting, tax reporting, and insurance. The efficiency in performing all these analyses at the same time leads to pricing benefits for our clients.
Why should I spend resources with an outside firm determining if my fixed asset list is accurate?
Most companies are diligent about adding acquired assets to their books. A large percentage of companies do not focus on eliminating assets from their books when sold or retired. The asset may have reached a $0 depreciable value, but each asset costs money when it comes to the replacement value for insurance purposes. Why does a 200-bed hospital have 500 beds on its asset list? Why does a 600-seat multiscreen movie theatre have 1,000 seats on its books and a projector from 1993?
Our insurance broker said the cost of our property insurance has increased this year due to inflation and the increase is substantial. How can I determine if updated replacement cost is reasonable?
Our specialists have a great deal of experience providing detailed replacement cost analyses that help our clients negotiate a lower property insurance cost.
Why should I spend resources determining if the seller’s fixed asset list is accurate?
We perform onsite inspections of facilities to improve the accuracy of the asset records and the valuation analysis. Site inspections keep investors from capitalizing and paying for property taxes and insurance on assets no longer owned or in use (aka Ghost Assets).
My clients don’t want to spend money cleaning up lists of acquired assets and/or valuing acquired assets; they prefer just taking the seller’s book values. How can I convince them that your service is value added?
There is often a material depreciation benefit to stepping up the value of acquired assets vs taking them over at book value. We provide preliminary estimates to determine if the fair value step up of the acquired assets is worthwhile to the acquiror.
We also find that sellers’ asset lists typically include a material percentage of assets no longer in use (“ghost assets”). Cleaning up the asset list can benefit a buyer in numerous ways:
• Reducing goodwill
• Not paying for insurance and property tax on assets that don’t exist.
• Complying with audit requirements to have control of their assets.
Why shouldn’t my client just rely on a broker or assessor for the real estate value?
Real estate should be looked at strategically for potential beneficial tax reporting, financial reporting, depreciation including cost segregation and bonus depreciation, financing including sale leaseback, etc.
For financial reporting, the value of acquired real estate needs to be allocated to land, building and improvements, and intangible assets.
The fair market value of acquired real estate is often much higher than the seller’s capitalized basis and the allocation between land (not depreciable) and improvements (depreciable) is often different than what the assessor has determined.
Does Marshall & Stevens value international companies and assets?
Marshall & Stevens values companies and assets around the world. Our staff travels as necessary to conduct site inspections, management interviews and perform other due diligence.
I just received an unsolicited offer for my business. How do I know if it is a good price?
Don’t enter into discussions to sell your business without having an understanding of the value of your business and the tax implications of the transaction. We can help.
Why would I want to separate intellection property or real estate from my business?
These assets may be held outside the business and leased back to the business, and/or to other businesses, in order for you and your family to maintain control of the asset into perpetuity.
Our accounting firm said we need a “409a” analysis for our equity incentive plan? What does that entail?
A 409a analysis (IRS section 409a) refers to valuing the class of equity provided to parties without remuneration (as an incentive) for federal tax reporting purposes. The analysis is also required for financial reporting purposes (FASB ASC 718). The analysis typically requires a valuation of the underlying business or assets. Sometimes we can backsolve a value for the equity based upon a recent subject company transaction.
Why use a complex option pricing model rather than a simple probability weighted analysis for the valuation of earnouts, management incentive units, profit units, and other equity instruments?
Each audit firm has their preference for the way certain financial instruments should be valued. We initiate a call with the audit team before performing the analyses to reduce the potential for delays and surprises.
How are SPAC fairness opinions different for other fairness opinions?
A SPAC is a public company; as such, all public company transactions receive scrutiny from a larger audience than private company transactions. That said, fairness opinions differ by scope of work – are we being asked to opine only to the consideration being paid (or received) or are we to also opine as to the process undertaken to arrive at the proposed transaction.
Our SPAC / de-SPAC transaction fairness analyses and opinions are typically done in phases to address value first, then fairness of the transaction consideration to the party engaging us.
Do you diligence your clients’ financial projections or just accept them as is?
We review financial projections against past performance, comparable company performance, and industry forecasts. We ask for support from our clients, as necessary, to make us comfortable with their projections and to provide an explanation in our valuation report.
Private Equity, Hedge Funds, etc. are receiving more scrutiny every year from regulators but investors don’t want to spend a lot of time and fee on compliance. How can you help?
We focus on efficiency. Our team includes senior valuation professionals with experience working at international audit firms – they did the same review work your audit firm valuation professionals do – making them a great resource to our clients. These specialists understand the materiality thresholds while meeting regulatory requirements.
We provide negative and positive assurance letters upon request.