What standard should the appraiser write?
Three standards show up on manufacturing deals. FMV (fair market value) in continued use or in-place assumes a willing buyer and seller and, when specified, that the assets stay in the plant as part of a going concern. OLV (orderly liquidation value) assumes a reasonable marketing period — often described as about six to twelve months; confirm the appraiser’s written definition. FLV (forced liquidation value) is auction math on a short clock.
Use the appraiser’s engagement letter. Do not freelance. A CIM that says “the iron is worth $2.4 million” without a standard is a brochure. A lender term sheet that says “OLV” and a seller who answers with “retail replacement” are having two conversations.
Appraisal versus broker opinion of value is the professional-boundary page. This page is the iron. Asset value versus earnings value is when the written OLV changes the deal.
Census CBP 2023 still counts 284,452 manufacturing establishments (Source: Census). Most of them have a machine list. Few of them have a current M&E appraisal when they first call a broker. The list can wait a week. The standard cannot wait until week six of exclusivity.
How do lenders use OLV?
Many lenders want OLV because collateral is what they sell if the note fails. SBA 7(a) still caps at $5 million for that product (Source: SBA). The lender’s advance rate on iron is not your going-concern multiple. A $1.8 million OLV on a CNC file does not make the business a $1.8 million earnings story, and a $900,000 SDE file at 2.0x–3.6x (general job-shop SDE cell) does not make the iron worthless.
Ask the lender which standard they will commission. Some will accept a desktop. Some will want a walk-through. Leased machines, titled trucks, and landlord-owned cranes do not belong in the borrower’s collateral stack. Lien searches exist for a reason.
Environmental conditions attach to the real property more than to a mill, but pits, sumps, and paint lines still show up in plant diligence (Source: Acquisition Stars on manufacturing environmental diligence). An M&E appraiser is not a Phase I author. Do not ask one report to do both jobs.
When is FMV in continued use the right number?
Going-concern buyers care whether the cell will still make the quoted parts after close. FMV in continued use is the standard that matches that question. It usually sits above OLV on the same list because it assumes installation, power, foundations, and a buyer who needs the output.
Useful-life notes on this site are broker/appraiser practice, not IRS MACRS and not a dealer price guide. CNC equipment values and useful life covers control generation, 4/5-axis, and why older Fanuc iron can still run while recent 5-axis holds OLV better. The equipment guide is the list format.
Do not publish asking prices for a named 2014 VF-4SS without a sourced auction or dealer comp. The research file forbids it. So does this page.
| Standard | Typical user | Typical question | Wrong use |
|---|---|---|---|
| FMV in continued use | Going-concern buyer | What is the iron worth in place, making parts? | Collateral on a liquidation theory |
| OLV | Lender; asset-floor test | What would an orderly sale bring? | Pricing a healthy strategic premium |
| FLV | Distress; auction | What does a short-clock sale bring? | A CIM on a booked, certified plant |
Why is FLV the wrong instrument for a healthy shop?
Forced liquidation assumes a buyer who does not need your floor plan, your crane coverage, or your power drop. It is the right instrument when the file is actually distressed — see valuing a distressed manufacturer. It is a scare tactic when a going-concern medical molder at $4 million of adjusted EBITDA is sitting in the 6.5x–9.0x $3–10M cell.
A buyer who opens with FLV on a booked, certified plant is telling you they want an asset deal. Answer with the earnings cell and a written FMV if you have one. If the earnings cell cannot beat a written OLV, you were in an asset deal anyway.
Fed G.17 utilization 76.0% in July 2026 (Source: Fed G.17) is not an appraisal input. It is a reminder that idle iron in a low-utilization bay will not appraise like a two-shift cell. Tell the appraiser what is in the quoted capacity and what is a spare.
What belongs on the machine list?
Make, model, year, control, serial, hours or cycles if available, owned versus leased, lienholder, last rebuild, and whether the cell is in the quoted capacity. Crash history and spindle-hour logs belong in the maintenance file — see equipment age and capex.
SMT and electronics lines obsolete faster than mills. Fiber lasers have superseded CO2 for many gauges. Injection molders care about tonnage, robots, and barrel/screw condition. Stamping presses care about foundations and pits. None of those sentences is a price. They are what the appraiser will ask.
BLS wage data does not value a machine. It values the people who run it. A cell without a programmer is a different going-concern than a cell with one. Keep the labor conversation on skilled labor and the iron conversation here.
Jason Taken will tell you when the floor might win and when to hire the appraiser. Sellers start at sell my manufacturing business. The valuation pillar keeps the earnings table. This page keeps the standards from collapsing into one word: “worth.”
How to engage the appraiser so the report is usable in the deal
State the intended user: lender, buyer, or seller. State the standard. State in-use versus removed. State the effective date. Give the serial-level list before the walk. Mark leased and customer-owned assets so they are not in the total. Tell the appraiser which cells are spare.
A report written to the wrong user will be rewritten. A report that includes the landlord’s crane will be argued. A report dated eighteen months ago will be discounted. Budget the update.
Desktop opinions exist. Walk-through opinions exist. Auction flyers exist. They are not interchangeable. Ask which one you are buying.
What “useful life” in a CIM should match
It should match the appraisal, not a blog and not MACRS. CNC useful life is practice color. If the appraiser says a 2011 horizontal has eight years remaining in continued use and the CIM says three, someone is selling. Align them before the QoE.
Software seats, probing cycles, and pallet pools affect continued-use FMV more than FLV. Tell the appraiser what is installed. A control upgrade that exists only as a quote is not installed.
Coordination with environmental and real-estate work
Pits, sumps, and paint lines sit on the property stack as well as the iron stack. Do not ask the M&E appraiser to waive a Phase I. Do not ask the Phase I author to value a press. How real estate affects value keeps the dirt separate. Acquisition Stars’ manufacturing environmental note is the tone for RECs: escrow, chip, or walk.
If the plant might be distressed, read valuing a distressed manufacturer before you pay for FMV in continued use. That standard assumes a going concern. Paying for it on a shutdown clock is wasted money.
How to write the engagement letter so the report is usable at close
Intended user, standard, in-use versus removed, effective date, serial list first, leased and customer-owned marked out, spares marked. A report to the wrong user gets rewritten. A report that includes the landlord crane gets argued. A report dated eighteen months ago gets discounted. Desktop, walk-through, and auction flyers are not interchangeable. Ask which you are buying.
Useful life in the CIM should match the appraisal, not a blog and not MACRS. Software seats and pallet pools affect continued-use FMV more than FLV. Pits still need a Phase I. If the plant might be distressed, do not pay for FMV in continued use on a shutdown clock.
Educational information only. Not an appraisal and not tax, legal, or engineering advice. Confirm with M&A counsel, a CPA, and a credentialed M&E appraiser. No value is guaranteed.
An engagement checklist that prevents a rewritten report
Intended user. Standard. In-use versus removed. Effective date. Serial list first. Leased and customer-owned marked out. Spares marked. Ask whether you are buying a desktop, a walk-through, or something that will be confused with an auction flyer. They are not interchangeable. Useful life in the CIM should match the report, not a blog. Software seats and pallet pools affect continued-use FMV more than FLV. Pits still need Phase I. Do not pay for FMV in continued use on a shutdown clock. Jason Taken will not write the number.
A closer read on engagement
Intended user, standard, in-use versus removed, effective date, serial list first, leased and customer-owned marked out, spares marked. Ask whether you are buying a desktop or a walk-through. They are not interchangeable. Useful life in the CIM should match the report, not a blog. Software seats and pallet pools affect continued-use FMV more than FLV. Pits still need Phase I. Do not pay for FMV in continued use on a shutdown clock. A report that includes the landlord crane gets argued. A report dated eighteen months ago gets discounted. Jason Taken will not write the number.
Why the engagement letter should name the premise before the walk
Orderly liquidation value, fair market value in continued use, and forced liquidation value answer different questions. An engagement that says “appraise the machines” without a premise produces a report nobody can use at the credit committee. Lenders who need a liquidation number cannot use a continued-use number. Going-concern buyers who need remaining life cannot use a forced-sale number written for a sheriff.
Write the premise, the effective date, and whether software, tooling, and customer-owned iron are in or out. Send the reconciled machine list first. A walk against an unreconciled insurance schedule wastes the appraiser’s day and your money. Jason Taken can help stage the list. He will not sign the report. The premise picker — no invented machine prices — is the equipment value OLV / FMV estimator.