CAPITAL STRATEGY INSIGHTS: Reimagining the Process #022

April 16, 2024

#022 Outgoing Equipment – Tactics Pros and Cons Part 2

Our last took a deeper dive into the pros and cons of some of these typical actions or tactics used with outgoing, surplus equipment. We looked at Storage and Disposal as two tactics that can be used for surplus equipment. Let’s look at several more.

Trade-in – This is a low-friction method that gets the equipment removed, and hopefully provides some equity recovery for the outgoing asset.

Pros: Shifts the costs and efforts of disposal to the vendor; Owner might receive some equity value as part of the transaction.

Cons: You’ve stayed at one of those hotels with “free” breakfast consisting of powdered eggs and rewarmed food items you would send back at most restaurants? Nothing free about it – you paid for it in the room charge. Same with the trade-in. Shifting costs and efforts of disposal to the vendor is only margin you didn’t get off the purchase of the new device(s). If you don’t have equity in the device, you are covering the vendor’s risk and loss by taking the trade-in in the price paid for the new unit. If you do have equity, you are counting on the vendor to give you comparable value to what you would get if you sold on the secondary market.

Consider: Know the equipment’s value prior to trade-in to make sure that you are getting every dollar of value out of the transaction.

Internal Transfer or Peer-to-Peer sale – If your organization can support the cost-effective redeployment of an asset through internal transfer/sale, this can be a high value solution.

Pros: Owner/seller obtains a predetermined value (frequently FMV) plus the costs and efforts of transfer, from the buying entity. Buyer obtains “known good” used device likely maintained by parent system.

Cons: Transferring/selling assets with insufficient equity and remaining useful life is a waste of money. The deinstallation, transfer, and reinstallation can be logistically challenging and costly, and may require contracting to third parties to execute.

Consider: Know the equipment’s value, remaining useful life, and costs to redeploy prior to completing the sale.

Secondary Market – Equipment resellers are in search of surplus/outgoing medical equipment to resell and will generally make you a solid offer including equipment removal.

Pros: Shifts the removal costs and efforts to the equipment reseller; Owner might receive some equity value as part of the transaction.

Cons: Equipment resellers must be vetted carefully. The industry has yet to shed its reputation for fluid ethics. Removal may not be performed as professionally as you would like. The equipment reseller has a profit motivation and will be trying to acquire your asset for the least amount of money.

Consider: You can find good quality equipment resellers, people that are professional and ethical. Get to know them and keep them in your contacts. As always, know the equipment’s value prior to contacting them for a quote.

Donation – Assets can be liquidated by donation. This is a feel-good, good press solution, and that maybe sufficient justification for doing. The recipients can be international or domestic, and used for care or for training. Keep in mind the cost of donation will be born by the owner. Consult your tax accountant for guidance regarding the value of your donation, the cost to donate, and the recipient of the donation.

Another consideration is that the third world isn’t what it used to be; they don’t want just any used equipment anymore. As buyers, they have a need for more current equipment.

Summary – We’ve provided some pros and cons of multiple methods of liquidation. If there is a key take away for this group of tactics it is to know the value of your equipment prior setting a course of action. The course of action chosen will be dictated by your equity position and the costs of removal.

Thanks for reading this post. Until next time, be well and continue to think strategically about your capital assets. Please feel free to comment when we post it on LinkedIn or at