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Why don't most companies just write down their goodwill whenever they want to reduce their taxable income?
If writing down goodwill is an expense and in turn reduces your taxable income, why don't more companies do it at their discretion? Do they have to legally prove the goodwill is worth less before they can? Help me make sense of this.
Effect von goodwill impairment on EV/EBITDA Multiple
How does an extraordinary amortization (e.g. goodwill impairment) affect the EV/EBIT multiple? In principle, our EBIT would decrease, which is why the multiple should increase. However, EV should also decrease at the same time. Which effect would generally be stronger here?
Goodwill Calculation after LBO - LBO modeling
Hi, Do i add or subtract existing goowdill (target's goodwill) to the new pro forma Goodwill? Thanks in advance.
S&U & Goodwill in LBO paying off Off-BS Debt
Hi all - Working on a deal where we assume all debt, and raise new debt to pay off debt-like items on the BS (with some wiggle room to reduce our equity as new debt > off-BS debt we're paying off). My questions are: 1a) Is my S&U correct (version 1)? 1b) Is my S&U correct (alternative version, my...
Advantages of stripping out Goodwill in its entirety in Valuation
What are the advantages of stripping out Goodwill when valuing a company? Are there better ways to adjust for Goodwill? What is standard convention for analyst treatment for restating financials? Thanks
An accounting question - on goodwill after transfer of ownership
Hi all long time lurker, first time poster. I'm working on a company that the ownership of the company is set to change hands. Owner bought private company A at USD100, and sells it at USD200. With the new ownership, I understand that there is a premium of 100 to be book, supposedly goodwill. Can...
Why do you add existing goodwill to calculate goodwill in an acquisition?
In an acquisition you calculate the pro forma goodwill as Eqty Purchase Price - BV of Equity - Write-ups + DTL (from write up) + Existing Goodwill The new goodwill represents the new excess purchase price, but then I'm confused why do we have to add the old goodwill? Confused about that. E.g. if we...
3 Statement Model Sponsor Investor 1hour
Hi I have an interview coming up and have to do a 1 hour 3 statement model with two scenarios. One is standalone and one is with a sponsor investor. No DCF or LBO involved. I am pretty clear on the standalone one but not too sure what they want for the sponsor. I guess I have to do a sources and...
Goodwill/intangible effect on Shareholder's Equity?
Where does goodwill/intangibles show up in shareholders' equity? e.g. if a company has a lot of goodwill it seems according to assets - liabilities = equity that this will either lead liabilities to increase or equity to increase. Conversely, what happens when goodwill gets written down? How does...
Purchase Price Allocation - Target Company with negative book value (SHE)
I'm doing an analysis of the purchase price allocation in a situation where a target company has negative book value (A the total purchase price. As example: Total Purchase Price = $100 Target Assets = $10 Target Liabilities = $15 Goodwill = 100 - NBV = 100 - -5 = 105? Would love some thoughts here,...
Goodwill & Target Company Balance Sheet
Hey guys, Have a quick question i'm trying to figure out. I'm wondering how goodwill can end up on a target’s balance sheet in an M&A deal, as typically it would be recorded on the acquirers B/S. Any good sources to read up more on this? Appreciate the help in advance
WSO PE Prep Pack Model
Hey all, I have the PE Prep Pack, and am doing the first full 3 hour model. In doing the balance sheet adjustments, I see that the goodwill calculation is essentially just a plug difference between the pro forma adjustments. I am wondering why that is, and why the goodwill calculation isn't the...
How would amortization of intangibles make an acquisition dilutive?
I understand that logically, if intangible assets are amortized, then the company is going to take a hit to the income statement. But this doesn't happen right away, right? I mean, the company would have to re-asses its assets (like Ebay/Skype) and then do a goodwill impairment. So how does...
When might goodwill increase?
I'm a little confused by M&I's answer to this question, which is: 1. during an acquisition because goodwill is a "plug" for the purchase price, or 2. when a company acquires another company but pays more than what its assets are worth My confusion: Aren't these two answers essentially the same...
How Does Goodwill Affect The Financial Statements
Does Goodwill affect net income? Also, if Goodwill decreases on the balance sheet from year to year, is there an adjustment for it on the SCF? Please explain why. Thank you!
Adding M&A fee to Goodwill
Would you add the m&A fee to goodwill, or would you subtract it from SHE? Or, would you expense it in OpEx?
Forecast Goodwill for Blue Chip TMT company
I have to model the goodwill for a European blue chip TMT company, that have annual goodwill impairment but normally performs M&A activity (and surely will keep doing next 5 years) Do you guys have any suggestion? Some analysts prefer to keep it flat, but in this case it is not likely. Thanks a lot,
Fundraiser Started For Homeless Man Who Turned In $40,000, Passport
UPDATE 09/16: A fundraiser started for a homeless man in Boston who turned in a backpack full of cash has nearly reached its goal of $50,000. Beyond that, the fundraiser’s organizer, Ethan Whittington, said in an update Tuesday evening that he has spoken with people about finding the man, Glen...
Goodwill Created in a Debt to Equity Restructuring?
I'm reading through the Scheme Explanatory (i.e., document which sums up the restructuring for the creditors prior to signing the scheme of arrangement (UK law)) and in the pro-forma balance sheet goodwill has been created. How? This is a debt for equity restructuring from a few years ago, mezz/2nd...
Purchase Price Allocation: equity purchase price options
Regarding the allocation of excess purchase price in a change-of-control transaction, what is the proper procedure? I have seen it done a few different ways, and they all result in a balanced B/S, but there has to be one correct way to do it. The way I've seen it: (1) Equity purchase price less...
Calculation of Goodwill in Acquisition?
Can someone verify for me how to calculate Goodwill in an LBO? I think it's: Equity Purchase Price - Book Value of Equity = Goodwill. And BVE = Retained Earnings. But what if BVE is > than Equity Purchase Price? Then Goodwill is negative? That doesn't seem to make sense to me. Please clarify where...
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