Mobile vs. installed assets
Like any asset class, machinery and equipment (M&E) assets can be subject to fluctuations in value for any number of factors. Some of these factors (economy, industry-specific trends, global pandemics!) are beyond the control of M&E asset owners, while others (care and maintenance, brand choices) can be specific to, and more directly influenced by, the owner.
At an even more foundational level, however, which one of two core categories we appraisers commonly view an M&E asset as belonging to can also impact its valuation. Let’s look at those two asset categories – mobile and installed – and how they differ in relation to asset valuation.
As the name implies, “mobile” M&E assets include items such as construction machinery, farm machinery and heavy trucks. They are more portable and, as such, most cost-effective at integrating into the operation of another business that may purchase them. Mobile assets are also somewhat standardized, with limited makes and models in each category. As such, manufacturers in these industries are generally well established and consolidated, which helps buyers trust these brands more. All of these factors enable for the collection of critical mass data and, as a result, more clarity in assessing the valuation marketplace for mobile assets.
Installed assets, on the other hand, are not as portable and, as a result, not as easily integrated into the operations of a purchasing business. These assets also tend to be more customized than their mobile counterparts, with a seemingly endless ecosystem of manufacturers and configurations available. Manufacturers in these industries are continuously growing, failing and realigning, and this uncertainty means certain users only trust certain brands. All of these factors lead to significantly higher variability when compared with mobile assets – and, as a result, makes it much more difficult to draw broad conclusions or identify large market trends – about the state of the valuation market for installed assets.
What does this mean for asset owners? The standardization and mass data available with mobile assets makes it easier to identify broad valuation trends and project future valuations with confidence. For installed assets, on the other hand, valuation trends are much more difficult to identify, meaning it will more often come down to the specific asset and what potential buyers are specifically looking for.