Due Diligence and capital costs of vehicles and heavy equipment

searcher profile

December 02, 2020

by a searcher from University of British Columbia in Kelowna, BC, Canada

Hi everyone, I'm new to the group and under LOI with a small asphalt contracting company that does preventative maintenance and repairs. The company has a decent equipment list of vehicles, heavy equipment & tools.

I'm trying to get a better idea of how to effectively due diligence the equipment, estimate it's current value and project future capital reinvestments.

Does anyone have any good resources to share on this?

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commentor profile
Reply by an investor
from The University of Chicago in Honolulu, HI, USA
I've had to do something similar in the past when estimating a heavy equipment list. You can always use used listings to try to get to a ballpark estimate of current market value. I've also had some luck looking at auctions of similar equipment to get a good sense of value. A lot of the value will end up depending on the condition and remaining useful (mileage, expected mileage, etc.) life of the vehicles and equipment. What I have found most helpful is to hire a reputable mechanic as part of due diligence and have them do inspections on the vehicles and equipment and provide you with their opinion on current condition, remaining useful life and potential need for repairs/replacement. This should get you a good start on gathering the right info to get the info you are looking for.
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Reply by a professional
from University of Colorado at Denver in Denver, CO, USA
Thanks for the tag, Luke.
Lee, you're most likely wanting to connect with an Accredited Senior Appraiser (ASA certification). There are different options for appraisals, depending on your concerns and budget. Cheapest option is a "desktop appraisal" which is done remotely with a detailed list of fixed assets. The more expensive option is for the ASA to perform a site visit.
If you'd like to send me an email at redacted I can get you more information and introduce you to an ASA I highly recommend!
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