FMV vs OLV vs FLV when selling Mass Spec, Chromatography or Lab Gas Generators
By: Scott Ramscar on 28/07/2021
While the automotive industry can quickly point to Parkers Guide for current and depreciated values, unfortunately, putting a firm value figure on used Mass Spec, Chromatography, or Lab Gas Generator equipment has no similar benchmark for reference.
Moore’s Law (the observation that the number of transistors in a dense, integrated circuit doubles approximately every two years), combined with rapidly developing software, and seemingly endless development of models and manufacturers are just a few of the factors keeping the Parkers Guide level of ease out of reach.
Of course, anyone thinking of selling asks, "What is my analytical system worth?" and would love to have an immediate answer with as many zeros on end as possible. However, the points raised above, combined with the circumstances of your decision to sell, means that, unfortunately, the complete response to this question requires even more questions to be asked.
Below we break down the key questions to help you understand what to expect as you bring your used Mass Spec, Chromatography or Lab Gas Generator equipment to market.
Fair Market Value vs Orderly Liquidation Value vs Forced Liquidation Value
If this is your first trip to the land of equipment valuation, there are a couple of terms you’ll need to know:
- Fair Market Value (FMV)
- Orderly Liquidation Value (OLV)
- Forced Liquidation Value (FLV)
Here are quick definitions of these three terms for you:
Fair Market Value
FMV is an estimated market value of an instrument, based on what an end-user buyer (knowledgeable, willing, and unpressured) would likely pay for it to a seller (knowledgeable, willing, and unpressured) in the market. In FMV sales, negotiating the logistical costs is either part of the final price or a discount off the top of the final price. In short, a deal with no time or location restraints. Advertising of the system(s) and collection of money would be down to the seller. In addition, the buyer and seller would negotiate Decommissioning, Crating, Transportation, Warranty costs etc. Generally, these are the responsibility of the buyer.
Orderly Liquidation Value:
This is the value of your equipment if it sold today; as-is, where-is to someone likely to sell it on. It may not be the highest value you could achieve. However, it gets sale done and over quickly and generally puts the onus for decommissioning and transportation squarely on the purchaser. This type of sale is a transaction with a single seller given a reasonable amount of time to find one or more purchasers of a liquidation sale and should be somewhere between an FLV and FMV.
Forced Liquidation Value
This is the amount of money that a company will receive if it sold its assets in an auction immediately. It is based on the assumption that the business will sell its assets in the quickest time possible, which will usually lead to a low price. These types of sales often go to auction sites as they purchase an entire laboratory.
As mentioned - there’s no official guide for analytical equipment, but KRSS is about as close as you can get. With 100’s years of combined employees experience and offices in both the UK and Mainland Europe, our knowledge is broad and global, and our understanding of FMV vs OLV vs FLV runs deep.
Key Valuation Questions
The following are some questions you’ll likely get when seeking equipment valuation. Your answers will help determine whether you’ll be best served by an FMV, OLV, FLV or something in between, such as KRSS selling on your behalf.
What’s the age/condition of the system?
These basic details are essential for anyone hoping to give an accurate and fair valuation; date of manufacture, age of critical components (if they’ve ever been replaced), level of volume/usage, etc. Additionally, many systems can be upgraded over time. Knowing if the equipment or its software has received upgrades/revisions could significantly affect market value. Is the system under warranty? Is it still in use?
What’s your time frame?
If the circumstances of your sale demand a quick turnaround, you may be better served by offering it at, or around, OLV. It’s not top value, but when time is of the essence, a concession on price can speed things along.
How much time do you have? Selling to an independent such as KRSS will undoubtedly result in a quicker sale than trying to find someone yourself to purchase it. However, if time is no object, then FMV is the way to go.
Do you intend to replace what you’re selling?
While replacement is a typical endgame for equipment sales, various other circumstances bring used systems to the market. One thing we are reasonably sure of is that the OEM will offer you less on trade-in than an independent company such as KRSS would offer. The manufacturer will often provide you with a trade-in value against the new system if you purchase replacement instruments. Still, the reality is they will scrap the trade-in, and you would get the same discount anyway.
Will your valuation results be presented to a bank? Or are they solely for liquidation purposes?
Some customers only need an e-mail valuation for a given exercise. In contrast, others require a more formal document with pictures, equipment specifications, etc., to present to a bank or board meeting. KRSS is willing to support your FMV / OLV /FLV needs.
The Sound Bite
KRSS can provide Fair Market Values (FMVs), Orderly Liquidation Values (OLVs), Forced Liquidation Values (FLVs) depending on your needs.
Some of our clients seek assistance with values to sell their equipment to another site. Others reach out for valuations for insurance or asset values. Other clients need a complete valuation analysis to decide how to sell their instruments.
While these are a few examples of standard requests, KRSS stands ready to customize an equipment valuation to meet your specific needs.
If you have an instrument that you are looking to sell, please speak to KRSS using the link below, and we will assist you however we can. We offer several routes to sell your instrument: Cash Purchase (OLV), Sell on your behalf (somewhere between FMV and OLV), trade-in against a newer or other technology or trade-in against consumables with our sister company Chromatography Direct (FMV).