There are a couple of ways we use to assess the value of an asset:

1.  Historical Method

Compare the value of the vessel based on a specific historical sales tracking curve aligned to that type of vessel  assembled from sales we have conducted over the last 12 years and information provided from owners and contacts in the industry and comparing the price at sale to the original build price as a % of the original build price. The attached graph is a typical curve for a specific type of vessel.

The level of effort spent on maintenance will have a measurable effect on the realised value at sale point.

Also one should consider if the asset is priced to sell based on the market at the time. If a vessel is overpriced for the market they will remain unsold. Hence if sellers are prepared to meet the market a sale can be fast tracked.

Based on this chart we can get an accurate value of the vessel and this will be influenced by the level of supply and demand at the point of sale.

2. Buyer Perspective

The second way to look at the value of the vessel is based on experience of what buyers will look for when investing time into building a business.

The ROI would need to be in the order of 20/25% to make it worthwhile to invest as there have been other options in the market that can provide lower risk investment but at lower rates of return.

So if a buyer is looking to purchase a vessel to achieve a 20/25% ROI (variable a few % subject to tax situation),  the average gross yearly  income (after 3 years set up for new business)  from the business should be = to the value paid for the vessel (including upgrades at purchase).  Hence from this a calculation will easily show the weekly revenue required to achieve the ROI.

Hence once assessed a sale price attractive for a buyer can be assessed. This figure coincides well with the historical info in 1. above

The above is based on selling for the last 12 years and development of financial assessment models to assist buyer/seller understanding. Traditional vessel valuation tries to assess the residual value in the second hand equipments and materials which is adequate to a point however it fails to judge the market value can offer inaccurate values for the asset being contemplated.