What your used machinery is actually worth, and the three numbers that decide it

Ask 3 people what a machine is worth and you will get 3 answers, and all of them can be correct. The confusion is not about the machine. It is about which question is being asked. Appraisers settled this a long time ago with three standards of value, and once you know which one applies to your situation, most of the argument disappears.

The three standards

Fair market value is what a willing buyer would pay a willing seller when neither of them is under any pressure and both know what they are looking at. It assumes the machine is marketed properly, to the right audience, for as long as that takes. It is the highest of the three numbers and the slowest to realize. It is the right standard when you are valuing a business, settling an estate, moving an asset between divisions, or arguing with an insurer.

Orderly liquidation value is what the same machine brings when you have decided to sell but you still control the calendar. The usual assumption is a marketing window of 6 to 12 months, sold as-is where-is. This is the standard that fits most plant closures, because a closure has a deadline but it is a deadline you can see coming. Orderly liquidation value sits below fair market value, and the gap between them is mostly the value of time.

Forced liquidation value is what it brings at a properly advertised public auction, on a date somebody else has set, with the seller compelled to sell. It is always the lowest of the three. It is the right number when the landlord has the keys next month, when a lender is exercising rights, or when the site has to be dark by a date that will not move.

The three numbers describe the same machine on three different clocks. If you remember nothing else, remember that: the difference between the high number and the low number is time, not condition.

What actually moves the number, in rough order of weight

Is there a buyer for this class of machine at all. This is first because it dominates everything else. A general-purpose machine with a working second-hand market carries value almost anywhere. A machine built for one product, in one plant, with one set of tooling, is worth what the 2 people who need it will pay, and if neither of them is buying this year, condition does not save it.

Whether it is still under power. A machine a buyer can watch run is a different asset from a machine sitting on a pallet with its cables cut. The single most expensive mistake in a shutdown is disconnecting everything the week production stops. If you can leave a machine connected and demonstrable, leave it.

Completeness. Tooling, dies, change parts, spare rolls, the control cabinet, the manual, the software key, the nameplate. A complete machine is one machine. A machine missing its tooling is a machine plus a problem, and the buyer prices the problem, not the machine.

Age and generation, separately. Age is a number. Generation is whether the controls, drives and safety systems are the ones a plant would accept today. Older iron with sound mechanics and a modern control retrofit can outrank a newer machine with obsolete electronics.

What it costs to get it out. Removal cost comes off the top of what anybody will pay you. A machine on a ground floor by a overhead door is worth more than the identical machine on the third floor behind a structural wall, and the difference is not small.

Where it sits. Not the address, which stays private, but the practical reality: distance from a port, from an interstate, and from riggers who work on this type of equipment.

What we do, and why we do not publish a number

We do not publish figures for machines, on this site or anywhere else, because a published figure is wrong by the time it is read. Values move with demand in the industry that uses the machine, with the cost of new equipment, with freight rates, and with how many identical machines came out of other closures that quarter. A number that ignores those things is not a valuation, it is a guess with a decimal point.

What we do instead is straightforward. Send us the list: make, model, year, serial where you can find it, quantity, condition, whether it is running, and when it comes free. Photographs help more than descriptions. We come back to you privately, in writing, with what we believe it is worth on the timeline you actually have, and we tell you which of the three standards we used. If we would buy it outright, we say so and we say what we would pay.

That costs you nothing and commits you to nothing. It also tends to be the point where a shutdown stops feeling like a disposal problem and starts looking like a recovery.