CAPITAL STRATEGY INSIGHTS: Reimagining the Process #026

September 15, 2025

#026 Matters of Valuation – Valuation Matters

Asset valuations come in more flavors than FMV and are essential metrics to determine ongoing use and retirement approaches for capital assets.

I had a conversation recently with a well-respected materials professional about asset valuation. He had recently liquidated assets and wanted to understand if he had done well with the transaction and how to manage that process going forward.

Before I dive into that discussion too deeply, asset valuation is an incredibly valuable asset management metric or data point that is completely underutilized in healthcare today. After working a lifetime on the acquisition, repair, replacement, and liquidation of medical equipment, I have learned that asset valuation impacts every stage of the  asset ownership experience. Market valuation directly correlates to remaining life and future utilization decisions. I don’t say that because my company provides that service, I say it because we see tangible benefits from applying that information daily.

This discussion began with the thought that a Fair Market Value (FMV) appraisal might have been helpful with his most recent liquidation event. That position is likely correct; however, not for the reasons one might expect. FMV contemplates a transaction between well informed peers (in this case, one healthcare provider to another healthcare provider) and not under duress (time limitations). The thought was that FMV would provide guidance for sale of the devices on the secondary market, which would not be the case as those devices were being sold to resellers under limited time constraints. In that situation, one would want Orderly Liquidation Value (OLV).

So why was FMV still likely the correct position? If the owner/seller had first obtained the FMV of the devices in question, they would have had better information to determine the liquation approach that would yield the greatest return or recovery of past invested dollars. It would have enabled the financial analysis needed to answer the  question “do we transfer this internally, sell it, trade it in, or donate the unit?”

Why is that important? Why go through the cost and effort to make those decisions? I have personally been involved with a large number of these analyses, and it can mean a lot of money. One situation resulted in the seller obtaining an additional $55,000 in value. In my book, that’s worth the time and effort. Your circumstance may not even require an appraisal, depending on the assets and what you are trying to accomplish. Some circumstances are pretty obvious. I’ve had those situations as well and that can be solved with pretty quickly with a phone/video call.

In any potential appraisal situation, I truly believe you need an expert and objective 3rd party that has no financial stake in the valuation. That means this is not DIY, let Google value your equipment, or let someone who looks at a couple hundred assets a year provide the valuation. Get an expert. Get someone that knows medical equipment market values.

Thanks again for reading these posts. I hope you find value in them. Until next time, be well and continue to think strategically about your medical equipment. If this was helpful, please comment on LinkedIn or at info@medicalequipmentconsultants.com.