Fair value plays a central role in modern financial reporting. Under ASC 820 (and its international counterpart, IFRS 13), fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. This standard differs in important ways from the market value definitions used in typical lending or transaction appraisals. When a company’s financial statements include real estate, machinery and equipment, or other tangible assets measured at fair value, those figures must be supported by credible, well-documented valuations that can withstand scrutiny from auditors, regulators, and investors. As oversight of fair value measurements continues to increase, the quality of the underlying appraisal work has never been more important.

The need for fair value appraisals arises throughout the business cycle. The most common driver is purchase price allocation under ASC 805, where an acquiring company must allocate the purchase price of a business combination among the acquired assets, including land, buildings, site improvements, favorable/unfavorable leases, machinery and equipment, and furniture, fixtures, and equipment. Real property and personal property appraisals are also used for goodwill impairment testing under ASC 350, impairment and disposal analysis of long-lived assets under ASC 360, and cost allocation in asset acquisitions. Lease accounting under ASC 842 frequently requires market rent studies and valuations. Beyond these, fair value appraisals support fresh-start accounting for companies emerging from bankruptcy, periodic fair value reporting for real estate investment funds and other investment companies, and investment property reporting under IFRS for entities with international reporting obligations.

The clients who require this work are as varied as the assets themselves. Public companies and SEC registrants rely on fair value appraisals to meet quarterly and annual reporting requirements. Private equity firms and their portfolio companies need them following acquisitions, recapitalizations, and add-on transactions. Real estate investment trusts, institutional investors, pension funds, and real estate funds use them to support net asset value reporting. Manufacturers, retailers, healthcare systems, hospitality operators, and energy companies call on them when their operating facilities change hands. Valuation and accounting advisory firms often engage specialized real property and personal property appraisers to provide the tangible asset component of a broader business valuation, and restructuring professionals depend on them during reorganizations.

Valbridge Property Advisors is uniquely positioned to serve these needs. Our fair value team has experience on the audit side of these engagements; including reviewing appraisals on behalf of auditors, testing the assumptions, methodology, and support behind the values reported in clients’ financial statements. We know exactly what audit teams are looking for, and we build our reports to answer those questions from the start. This means fewer review comments, faster sign-off, and less disruption to your reporting timeline.

That review-tested approach is backed by the resources of the largest independent commercial real estate appraisal firm in the country. Valbridge combines a national footprint with local market knowledge, allowing us to value multi-property, multi-state, and international portfolios with consistent methodology and a single point of contact. Our professionals have performed and reviewed fair value appraisals for many Fortune 500 companies across industries including automotive, metals, retail, energy, and chemical. Whether you need a single-facility impairment analysis or a portfolio-wide purchase price allocation, Valbridge will tailor the scope of work to your reporting requirements. Contact a Valbridge Fair Value expert today to discuss your next assignment.

Joseph Alerding, Jr., MAI, is Senior Managing Director for Valbridge Property Advisors | Indiana | St. Louis | Kansas City | Minneapolis-St. Paul | Portland | Fargo. He can be reached at jalerding@valbridge.com.

The information contained in this publication is for informational and educational purposes only. It is not financial, legal, or other professional advice, and you may not rely on it for any purpose. To secure professional advice for your particular situation, you must engage one or more appropriate professional advisors to advise you about your situation.