True Value of Assets Identified, Enhancing OEM's Appeal to Investors
Client: HVAC Original Equipment Manufacturer
Challenge: Attract Investors with Unique Strategy to Value Molds and Parts Business
To appeal to investors, a manufacturer of heating, ventilating and air conditioning equipment asked AccuVal to identify the value of certain molds it used in making proprietary replacement parts needed by its installed equipment customer base. The customer had a sizable, measurable and profitable aftermarket parts business created by more than 30 years of selling products into manufacturing installations throughout the world.
AccuVal Approach
AccuVal advised the customer that if the molds were merely appraised as tangible assets, they would be valued for no more than scrap metal if sold at auction. Instead, AccuVal saw the hidden value the molds represented if they were properly bundled with other assets and appropriately appraised. The company agreed with AccuVal's recommendation and bundled engineering drawings, manufacturing specifications and its base of replacement parts users with the molds themselves. In the event the company was sold, these assets, if offered collectively, would represent viable and valuable collateral for secured lenders.
Bottom Line: Value of Servicing Installed Base Creates Annuity
By placing a value on serving the aftermarket, the bundled assets would represent an annuity to a buyer if the parts business were sold. Based on the historical need for proprietary parts by the existing customers, income generated from the sales of replacement parts is predictable, sure money, even if no new products were sold and the current cash-flow stream declines.
The AccuVal AdVantage™
Knowing how to uncover, bundle and determine the value of intangible assets. Valuation experience that considers real market information, financial performance, barriers to entry and competitive factors in a broad range of industries. That's The AccuVal AdVantage™ at work.
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