Before putting a figure on a machine, the valuer asks for documentation. This is not administrative box-ticking: each document closes a specific unknown in the method, and the ones left open end up as stated assumptions inside the report. This guide covers what is usually requested, what each block is for, and what the consequence is when something is missing.
Why the method starts with documentation
An industrial machinery appraisal is not an opinion of value: it is a figure justified under a recognised standard — the RICS valuation standards (Red Book) and the International Valuation Standards (IVS) published by the IVSC — and issued for a declared purpose. That traceability requirement has a very practical consequence: every assumption in the report must rest on a verifiable data point, and most of those data points can only come from the asset holder.
The three valuation approaches consume different documentation. The cost approach needs to know exactly which asset it is, how it was installed and how much it has been used, in order to build a replacement cost new and depreciate it. The market approach needs an identification precise enough — make, model, year, configuration — to search for real comparables of that same asset. The income approach needs to understand what the machine produces within the process. An ambiguous asset register does not degrade one approach: it degrades all three.
1. The asset register: the document that conditions everything else
This is the starting point and the single biggest determinant of the quality of the result. A usable register identifies each asset unambiguously, not by generic category. The fields the valuer needs in order to search for comparables are:
- Exact make and model, as shown on the nameplate.
- Serial or manufacturing number and, where it exists, the internal fixed-asset code the company uses.
- Year of manufacture, which does not always match the year of purchase.
- Configuration and optional equipment: in industrial machinery, two units of the same model with different equipment are not worth the same.
- Capacity or main technical characteristics (power, tonnage, working dimensions, number of axles or spindles, depending on the asset type).
- Physical location of each unit, where the portfolio is spread across several plants.
When the register arrives by category — “5 lathes”, “packaging line” — the work does not disappear: it shifts to the inspection, with a corresponding increase in scope. A granular register with serial numbers is the most effective way for the holder to accelerate their own engagement.
2. Acquisition data and accounting support
This block does not set the value — book value and market value are different things — but it does anchor the traceability of the method:
- Purchase invoices or acquisition contracts, evidencing title and documenting the original cost and its date.
- Fixed-asset register or asset ledger, with the depreciation criterion applied.
- Leasing, renting or hire contracts affecting any unit, together with their maturity status.
- Existing charges, retention of title or security interests already granted over the assets.
The last two points matter especially when the report is intended for financing: an asset with a prior charge does not count the same way in the collateral, and the recipient of the report needs to see that situation reflected rather than discover it later.
3. Maintenance history and technical condition
Depreciation of a machine is not a function of the calendar. Two units of the same year can be in very different condition depending on how they have been used and maintained, and the valuer needs evidence to support whatever adjustment is applied:
- Preventive and corrective maintenance records, or the maintenance plan in force.
- Usage counters: operating hours, mileage, cycles or units produced, depending on what the machine records.
- Major interventions: retrofits, replacement of main components, CNC or software upgrades.
- Certificates and statutory inspections in force where the asset type requires them.
- Known incidents and significant downtime, and faults pending repair.
4. Location, installation and conditions of use
This block supports a decision that often goes unnoticed and that moves the figure appreciably: what it costs to separate the asset from the plant it sits in.
- Layout drawing or distribution of the machinery on the shop floor.
- Installation requirements: foundations, anchoring, electrical or fluid connections, extraction systems.
- Access conditions for dismantling and transport: clear heights, passage widths, lifting equipment needed.
- Operating regime: number of shifts, continuity of the process, working environment (corrosive, abrasive, clean room).
- Status of the premises: whether the building is owned or leased and, in the latter case, what the contract provides regarding removal of installations.
These data are what allow a reasoned distinction between the different value premises — from market value through to the liquidation values — whose differences we develop in OLV, FMV and FLV: which figure each transaction calls for.
5. Documentation that depends on the purpose
The declared purpose determines the basis of value and, with it, what additional documentation is requested. The usual cases:
- Asset-based financing: existing charges and, if the report is to be updated periodically, the review criterion agreed with the lender.
- Insurance: the policy in force, declared sums insured and the valuation criterion the policy itself establishes.
- Sale and M&A: the exact perimeter of assets included in the transaction and its relationship with the rest of the production process. What the valuer reviews asset by asset in that exercise is set out in industrial due diligence: what a valuer reviews before a transaction.
- Accounting and audit: the accounting criterion applied and the reference date required by the recipient of the report.
What happens when a document is missing
A documentary gap does not necessarily block the engagement, but it has a cost and it has to be visible. There are three orderly ways out, and none of them consists of filling the gap silently:
- Replace it with fieldwork: what the paperwork does not provide, the inspection verifies. This widens the scope of the engagement.
- State it as an assumption or a scope limitation in the report itself, explicitly, so the recipient knows exactly what the figure rests on.
- Exclude the asset from the perimeter where the information is insufficient to support a defensible value.
The one option that is never acceptable is for the report to present as verified fact something that could not be checked. A demanding recipient — a risk committee, an external auditor, a court — reviews precisely those seams.
How to prepare the handover
Three practical criteria that shorten any engagement:
- A single register, in spreadsheet format, one row per asset and one column per field. A scanned PDF forces the work to be redone.
- Documentation grouped by asset, not by document type, and cross-referenced to the register code.
- The purpose declared from the outset. Asking for “an appraisal” without saying what it is for is the leading cause of reports that do not serve the need behind them.
This is how we structure information gathering in every industrial asset valuation we issue, with the asset register and the per-asset technical record forming part of the deliverable itself.
Frequently asked questions
Can an appraisal be carried out without a prior asset register?
It can be started, but the register still has to be built: in that case the valuer compiles it during the inspection, with more fieldwork in scope. The register is not an administrative requirement, it is part of the method.
Is book value a valid starting point?
It is valid as evidence of original cost and of title, not as an estimate of value. Accounting depreciation answers a tax and accounting criterion, not the technical and functional depreciation observed in the secondary market.
What if the serial number does not exist or the nameplate is illegible?
The asset is identified through its remaining technical characteristics and that limitation is documented in the report. Identification loses precision and, with it, the ability to rely on comparables of that exact model.
Does production have to stop for the inspection?
Not normally. The inspection is planned with the owner to minimise interference, and in many cases seeing the machine running provides useful information about its condition.
Who provides the documentation when the bank is the one requesting the report?
The asset holder provides it, even though the recipient of the report is the lender. The valuer works independently of both parties.
Does the checklist change for vehicles or IT equipment rather than machinery?
The five blocks stay the same; the specific fields change. For vehicles, registration, mileage and roadworthiness inspections carry weight; for IT equipment, configuration, associated licences and the manufacturer’s life cycle.
Have an engagement on the table and are unsure what to gather? Tell us about the case and we will confirm what we need to start.