There are certain machinery and equipment assets so difficult to separate from other installed assets that the only logical or practical way to liquidate them would be to sell as a single lot, with the express implication that a new buyer would continue to operate them in the manner in which they are presently employed.
We refer to this particular value as Orderly Liquidation Value-In-Place. The definition states that it is an opinion of value of the estimated gross dollars (before any sale expenses) which the assets could realize if sold by negotiated price (private treaty) sale at a properly advertised and professionally managed liquidation sale, by a seller obligated to sell, over an extended period of time, usually 6 to 9 months. Orderly Liquidation Value-In-Place assumes consideration of the present economy and viability of the entire facility being sold intact, along with all related equipment necessary to continue present processing operations. It further considers that Fair Market Value, as normally defined, could not be obtained owing to restrictions of time and probable conditions of the business under a forced sale environment.
There is an inherent difficulty in the valuation of certain high tech manufacturing equipment. The difficulty lies with the fact that such cutting-edge technology can transform amazingly fast, leaving modern, once-valuable pieces of equipment worth a tiny fraction of their original cost. Traditional methods of ascertaining value such as replacement cost analysis, comparison sales evaluation, or investment approaches need to be applied with great caution due to the unique circumstances of these types of assets.
Semiconductor manufacturing facilities and equipment present an excellent example of thedynamic circumstances affecting value. Semiconductors are produced by processing roundsilicon wafers upon which multiple individual semiconductors are arrayed. The size of these wafers typically is 100 mm, 150 mm, 200 mm and up to the current state of the art 300 mm.
|