Goodwill

Goodwill is the amount by which the purchase price of a company exceeds the value of its identifiable net assets. It arises on the acquisition of a business and reflects intangible values that are not recognised individually, such as brand strength, customer relationships, know-how or expected synergies.

Numerically, goodwill is the difference between the purchase price and the target's net assets remeasured at fair value. Under IFRS, goodwill is not amortised on a scheduled basis but is subject to an annual impairment test. If the recoverable amount falls below the carrying value, an impairment loss must be recognised that burdens earnings.

High goodwill signals that a large part of the purchase price is attributable to synergies and intangible factors. In the company valuation and the purchase price allocation as part of our M&A advisory, the robust derivation of goodwill is decisive for the subsequent accounting.