IT Assets & Residual FMV

Brian Little

10 May, 2022

Navigating This Market

Have you noticed significant market swings in the technology equipment industry - or really any industry for that matter? Yeah, we’re navigating those treacherous waters too.

   

All the market fluctuations we’ve been experiencing have added an extra layer of complexity for asset managers as they as they try to determine residual value targets that maintain profitability and minimize risk.

   

When it comes to complex solutions such as technology, it’s critical to have industry- specific partners that not only help remarket the assets, but also function as subject-matter-experts on the front-end, helping dial in the residual and avoid potential missteps.

   

Things to consider when assigning a residual value to a technology lease:

  • Software and support that is bundled with a technology solution often are not transferrable and should be removed from the residual calculation. A possible exception might be if an OEM documents in writing that their ‘secret sauce’ software has transfer rights – though this is not common.

   

  • Is the equipment you are leasing specialized? Does it have a small market share in the technology industry? This will impact the residual value because the secondary market value will be much less. On the flipside, if the equipment is widely recognized (think HPE, Dell, Cisco, etc.), the remarketing value in the secondary market is much stronger.

   

What It All Boils Down To:

Asset managers have enough on their plates already. So, why not leverage a partner that has been in the technology industry for 35+ years, has staff with an average tenure of 10 years, and a reputable track record of making life easier?


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