What Is Goodwill

What Is Goodwill

1. Goodwill is the immaterial value derived from factors such as the customers, efficiency, organization, credits, prestige, experience, and the position of the enterprise or business before third parties

   • Examples of negotiations of intangible
     • - When Proctor and Gamble purchased Gillette in 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.
     • - 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.
     • - 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 You- Tube is due to the expertise of the brand to attract subscribers, and therefore, the valuation made for the brand is extremely low.
   • Results of the studies of several companies on the identification and classification of intangible
     • Figure1: Distribution of the assets within the value of an enterprise: A) Analysis of the FTSE 100 (Financial Times Stock Exchange) index corresponding to the first 100 British companies in the Stock Market in London. B) Audit of Deloitte and Touch, Ernest and Young, KPMG and PWQC. C) Analysis of the negotiation of intangible assets (118 business combinations of 154 companies in the United States, Great Britain and the rest of the world)
       • Figure 2: Evolution of the negotiation of intangible assets: Modified using the reference [6].
         • Figure 3:Behavior of the negotiation of intangible assets based on signed agreements: Data taken from the Biopharmaceutiques web platform
           • Figure 4. Participation by type of agreement in the negotiation of intangibles: Made through the data published in the Biopharmaceutiques web platform

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