Course · Act I: The Buyout · Chapter 5
M&A synergies and goodwill
Cost and revenue synergies, how the premium over fair value becomes goodwill, why US GAAP tests goodwill for impairment instead of amortizing it, and what a write-down means.
Key terms
- Synergies
- Extra profit two companies expect to make together: cost synergies (spend less) and revenue synergies (sell more).
- Goodwill
- The price paid for a company above the fair value of its assets less liabilities. Sits on the buyer’s balance sheet.
- Goodwill impairment
- A write-down of goodwill when the business is worth less than its book value. A non-cash charge against earnings.
“Synergies and Goodwill” is part of the full course: 7 puzzles on m&a synergies and goodwill. Biscuit Barrel is fictional; the frauds in the notes are real, settled cases. Try this act’s free chapter, “What Does It Cost?”, first.
“Synergies and Goodwill” is in Act I: The Buyout. 7 puzzles, unlimited retries.
Go to chapter →