Goodwill

Goodwill

1. Is the immaterial value derived from factors such as the customers, prestige, experience, and the position of the enterprise or business before third parties

2. It is a highly valued asset since it enhances the possibility to obtain new clients, suppliers, credits and places the enterprise in an advantageous position in relation to competitors.

3. Examples of negotiations of intangible assets

   • Walt Disney paid 7.5 billion dollars for the Pixar digital animation studio. The intangible assets, brand and commercial names were valued in only 200 million dollars while the goodwill assets were valued in 5.6 billion dollars. This is another example of overestimation of goodwill assets and underestimation of the identified intangible assets.
   • When Proctor and Gamble purchased Gillette inm 63 billion dollars in 2005, the intangible assets were valued in 55 billion dollars, of which 35 billion corresponded to goodwill, representing 63.6 % of the intangible value. Hence, there was an overestimation of the intangible goodwill assets and an underestimation of the identified intangible assets.
   • In 2006, Google purchased YouTube for 1.2 billion dollars, which reached the headlines of the brand stock exchange. Out of the entire purchase, only 200 million were attributed to the identified intangible assets and 83.4 % to goodwill. It is known that the success of YouTube is due to the expertise of the brand to attract subscribers, and therefore, the valuation made for the brand is extremely low.
   • These examples demonstrate that the lack of knowledge for valuing intangible assets, separating goodwill assets, as well the fact that a calculation method has not been standardized, leads to a potential risk in its appropriate identification, and then they are overestimated or undervalued.

4. García-Delgado, D. (July 1, 2014). The evolution of negotiations of intangible assets apart from industrial property protection in biotechnology. Biotecnologia Aplicada. Retrieved from: http://bibliotecavirtual.unad.edu.co:2051/login.aspx?direct=true&db=edselc&AN=edselc.2-52.0-84938803564&lang=es&site=eds-live