Valuing vessels, similarly to valuing a house or commercial real estate or any other piece of property or equipment or even a business, it can be both an art and a science. The reasons for obtaining vessel valuations can vary, and the parameters for placing a ‘value’ accurately can be both objective and subjective. Vessel values have mostly to do with the ‘price’ of the asset and rarely with the ‘value’ thereof; but again, a market transaction takes place when a buyer and a seller agree on the price but they disagree on the value of the underlying subject matter.
Our firm, Karatzas Marine Advisors & Co., has been involved profoundly with vessel valuations to the extent of being considered experts on the subject of vessel valuation; we have published expensively on the subject, as well, and we have provided valuations considering every methodology available and variant thereof, including incorporating financial analysis and modeling and physical inspection of the vessel.
An article on the principal methodology of vessel valuations (market comparable approach, income approach method and replacement cost method) is posted herewith. The article was posted originally in the Tanker Operator magazine in December 2009. The article has been widely quoted in the shipping and banking industries, and also has been mentioned in a case study about vessel valuations prepared by the Harvard Business School.
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