Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Goodwill

Definition

An intangible asset associated with the acquisition of a company. This is normally carried on the acquiring company’s balance sheet, and is the portion of the purchase price allocated to the value in excess of the tangible assets acquired.

See Also

Allocation of purchase price.

Tips

The majority of the purchase price in most transactions is allocated to goodwill when determining the purchase price allocation. Allocating the price to goodwill is often best for the seller, as gains on goodwill are taxed at capital gains tax rates, as opposed to ordinary income tax rates.

Related Resources

M&A Basics | Allocation of Purchase Price