When a mid-size manufacturing firm in the Greater Toronto Area pursued the acquisition of a complementary business, they faced a common challenge: securing financing. The acquisition included not only goodwill and operations but also specialized machinery that would serve as collateral for the loan. To satisfy lender requirements, they needed a reliable, independent appraisal of the equipment. That’s where Lynx Machinery and Equipment Appraisal stepped in.
Background: The Client’s Situation
The buyer required a documented, defensible valuation of the machinery being acquired. Their objectives were to:
- Establish a credible value for the equipment portion of the transaction.
- Support lender confidence in the collateral.
- Minimize gaps between purchase price allocation and appraised value.
- Identify any hidden risks or depreciation issues.
Key Challenges
Several obstacles emerged during the engagement:
- Incomplete documentation: Missing service logs, serial numbers, and upgrade history.
- Mixed age and condition: Newer machines alongside aging, heavily used equipment.
- Custom-built units: Limited comparable sales for modified machinery.
- Integration into facility: Equipment tied to foundations, power systems, and structural supports.
- Lender risk tolerance: Conservative valuation standards and demand for clear backup data.
Our Approach
Lynx Machinery and Equipment Appraisal applied a multi-layered methodology to address these challenges:
- On-Site Inspections
Conducted condition audits with mechanical experts, cross-checking service records, measuring usage, and documenting with photographs. - Market Research
Analyzed sales and auction data for comparable machinery across Ontario, adjusted for modifications, freight, and current market conditions. - Custom Machinery Valuation
Broke down component values, applied risk adjustments, and validated assumptions through vendor quotes and project comparables. - Integration Cost Adjustments
Modeled dismounting, relocation, and reinstallation costs, reducing value where machinery was highly facility-dependent. - Sensitivity Analysis
Provided base, optimistic, and conservative value ranges to reflect varying assumptions and satisfy lender risk requirements. - Lender-Focused Reporting
Delivered a clear, defensible report with photos, assumptions, and appendices, followed by a presentation call with the lender to answer technical questions.
Results
The lender accepted the Lynx appraisal as part of the collateral package.
- The buyer secured financing with reduced equity requirements.
- The appraisal and purchase allocation differed by less than 5%.
- The lender gained confidence in recovery value through conservative assumptions.
- Post-acquisition, the machinery performed as expected, validating appraisal accuracy.
Lessons Learned
For businesses considering financed machinery acquisitions, this case highlights best practices:
- Always inspect on site—photos and spreadsheets aren’t enough.
- Break down custom machinery into components when comparables are scarce.
- Account for integration costs—facility dependencies impact value.
- Be transparent and conservative—risk buffers build lender trust.
- Involve the appraiser directly with lenders to strengthen confidence.
Why It Matters
This case demonstrates Lynx Machinery and Equipment Appraisal’s ability to bridge technical expertise with lender expectations. By combining mechanical insight, disciplined valuation methods, and clear reporting, we provided credibility that helped close the financing gap.
If you’re considering a machinery acquisition in the GTA or Ontario, Lynx Machinery and Equipment Appraisal can deliver the reliable, lender-ready valuations you need to move forward with confidence.