Monday, January 17, 2011

Accurate valuations picture for photo imaging

GoIndustry DoveBid Valuation Services was recently engaged by an Asset Based Lender (ABL) to appraise a manufacturer of monochrome photo imaging products. The ABL had an existing facility in place but required a re-appraisal to be carried out, as the market in which the company operates is in a general decline.
The inventory being appraised was in the form of raw materials, work in progress and finished goods, the majority of which contained traces of Silver.
Appraising the company gave rise to many challenges. Firstly, by the very nature of the product being sensitive to light, a simple test count threw up the first challenge. It is not every day that a test count is carried out in virtual darkness!
The second and most important challenge was putting value to the work in progress. It can be difficult to appraise WIP, as it's not normally clear how long it would take to convert, what the end product would be and at what price.

As a result, WIP tends to be overlooked by the majority of ABL inventory lends. However, in this case, the costs and processes involved to convert the WIP was generally low and achievable within the proposed 90 day exit. Due to the Silver content, consideration was also made to materials that were deemed slow moving or obsolete. The Silver content was quantified from the excluded inventory and added back into the overall NOLV. Finally, although raw materials were not part of the existing facility, a review was carried out with value being achieved post the review of retention of title.
Our valuation, excluding value attributed to raw materials was broadly in line with the prior appraisal. However, placing value on the raw materials, the company is hopeful that following the GoIndustry DoveBid appraisal, terms currently being offered by the ABL may be improved.

For more information on the services offered by GoIndustry DoveBid please visit our web page at Go-dove.com

0 comments: