5 benefits of specialised valuations for plant and equipment

Notwithstanding your industry, an accurate and fair purchase price needs to be assigned to all plant and equipment assets; a process referred to as a purchase price allocation or purchase cost allocation.

From office, industrial, and hospitality, to engineering and construction, plant and equipment assets are utilised across all sectors. As these assets can depreciate faster than others, they call for regular, more complex professional valuations.

“In most instances, when the value of plant and equipment is not accurately determined, the purchaser in a transaction is most commonly disadvantaged,” says Tony Pratt, Head of Plant, Equipment, & Infrastructure Valuation Advisory at JLL NZ.

Below are just a few reasons why valuing plant and equipment accurately is essential to your business.

The transaction process can be time-consuming and tedious for both the buyer and the seller. Time is always of the essence and unforeseen delays frustrate all parties involved and could jeopardise the sale. A drawn-out transaction can also lead to mounting service costs such as deal advisors, lawyers, and accountants. A definitive PPA is just one of the ways to avoid surprises late in the piece.

Regardless of the outcome of the upcoming national election later in 2023, it appears both major parties are intent on rolling back the tax changes to commercial properties introduced as part of the COVID response measures. This means no further depreciation of the building structure, making it critical that you maximise your tax benefits by correctly identifying the market values of your plant, equipment, and fitout.