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Buyer-Side Due Diligence
The buyer’s team may commission its own P&M valuation as part of its acquisition analysis.
PRE-SALE P&M VALUATION
Selling Your Factory — The P&M Certificate That Prevents the Buyer’s Markdown
When you sell a manufacturing business, the buyer’s due diligence team will include their own P&M valuer. That valuer’s certificate will be used in the Purchase Price Allocation (PPA) — the breakdown of the acquisition price between different asset categories that affects the tax treatment of the transaction and the balance sheet of the acquired business.
An independent Government Approved P&M Valuer’s certificate obtained before the buyer’s team arrives establishes a defensible Fair Market Value (FMV) and gives the seller documented valuation evidence for the transaction.
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Section 34AB
Category IV
Category IV
THE TRANSACTION CONTEXT
Why a P&M Certificate Matters Before the Buyer’s Valuer Arrives
A factory sale is not only about the headline purchase price. The allocation of that price across plant and machinery, buildings, inventory and other assets can become an important part of the buyer’s due diligence and Purchase Price Allocation exercise.
02
Purchase Price Allocation
The acquisition consideration may be allocated between asset classes through a formal PPA exercise.
03
Independent Evidence
A pre-sale certificate creates a documented valuation position based on condition, RCN, depreciation and relevant market evidence.
INDEPENDENT PRE-SALE CERTIFICATE
What an Independent Pre-Sale Certificate Provides
The certificate brings together the technical evidence behind the factory’s P&M value before the buyer’s valuation exercise begins.
01
The Defensible FMV
A Section 34AB Category IV certificate from A2Z Valuers provides independent evidence of the factory’s P&M fair value.
The valuation can document the specific DRC computation, condition assessment and Replacement Cost New (RCN) data supporting the concluded value.
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Documentation of Maintenance Quality
Where a factory has been systematically maintained, the pre-sale valuation can document the maintenance log review and the condition evidence considered during the valuation.
This evidence can also document the relationship between maintenance condition and the assessed Remaining Useful Life (RUL).
03
GMP & Regulatory Compliance Premium
For pharmaceutical manufacturing equipment, GMP compliance status, US FDA or EU GMP inspection history and equipment validation documentation may be relevant valuation evidence.
A specialist pharmaceutical P&M certificate can identify these factors explicitly rather than treating the equipment as generic industrial machinery.
04
The Capital Gain Basis
The pre-sale valuation establishes a documented FMV at the relevant transaction date, where such valuation is relevant to the tax computation for the transaction.
This gives the transaction team a clearly documented valuation record to retain with the supporting transaction documentation.
WHAT GETS DOCUMENTED
Build the Valuation Evidence Before Negotiations Begin
A pre-sale P&M valuation creates a structured technical record around the assets being transferred. The objective is to establish the basis of the concluded value through identifiable evidence.
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01
Asset Identification
Machinery schedules, equipment descriptions, specifications and relevant asset information.
02
Condition Assessment
Physical condition, maintenance history, utilisation and operational observations.
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RCN & Depreciation Evidence
Replacement Cost New, physical depreciation, useful-life considerations and relevant obsolescence factors.
04
Specialist Compliance Factors
Where applicable, GMP, validation, inspection and regulatory evidence relevant to specialised manufacturing equipment.
SELLING A MANUFACTURING BUSINESS?
Establish Your P&M Value Before the Buyer’s Valuation Team Does
Discuss your factory machinery, equipment schedule, maintenance records and transaction requirements with A2Z Valuers before the due diligence process begins.