How to Appraise Industrial Paper Mills
If the owner of a paper mill wants to sell his business, he needs an appraisal for the business' heavy equipment, industrial machinery, and real estate to assess its value. Similarly, he may need an appraisal to obtain bank financing or due to court litigation. The business could be ready for expansion, and requires an appraisal for strategic planning. As an accredited appraiser, the paper mill owner relies on you to carefully formulate your opinion of the business' value.
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Instructions
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Request documents from the owner of the mill, which includes a copy of the deed, mill survey, list of recent improvements, assets list, last five years of financial statements, accounts payable and receivable, inventory, leases, sales contracts, insurance and the company's legal formation documents.
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Inspect the interior and exterior of the mill. Assess any detriments to the property, including flood and earthquake zones, obvious soil conditions and easements.
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Inspect the general construction of the building for overall condition and improvements to the property.
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State your findings for occupancy. Identify the tenants and purpose of the lease. State the highest and best use of the property, based on its zoning and potential uses with improvements.
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Verify the company's asset list. Inspect the mills generators, conveyors, pulp dewatering equipment, bale press, role wrapping systems and other heavy machinery or equipment.
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Analyze the data you have accumulated. Compare the value of the pulp and paper machinery and equipment to machinery value from the database of certified appraisers.
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Determine the best appraisal approach for the paper mill. Formulate a valuation using an income approach of the majority of the assets are intangible. Consider using a market approach if there are other paper mills with which the the business's data can be compared. Use an asset valuation if the paper mill is asset rich.
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Form an opinion of the worth of the paper mill. Use a standard appraisal format to substantiate your reasoning. State the date of the value, date of the report and the specific person and company that the appraisal was prepared for.
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Tips & Warnings
An appraiser must be careful to state that the appraisal is not an environmental assessment. Soil and other subsurface conditions cannot be verified in the appraisal.
References
Resources
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