What happens to the target’s existing goodwill during an LBO? Some formulas show it as being wiped out completely while others have it being added back to the PF goodwill calc.
Thanks!
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IMO, existing goodwill gets wiped-out and new goodwill will be the price paid above the fair value of net tangible assets
You re-calculate goodwill on the full businses (incl the previously acquired businesses). From date of acquisition you start amortising the new goodwill (not tax deductable in every jurisdiction - so make sure you know what you're doing).
Above answer is correct, however what happens to existing GW amortization on the IS? continue including it on the IS in your model or wiping off?
Also wondering
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