Tip #165: The Value of Goodwill in a Business Transaction

Business negotiator in shock at owners asking for extra compensation. One of the most important reasons a business is sold is not just for its tangible assets, but for its intangible assets – such as its knowhow, its customers and its employees. Because goodwill is intangible, it can make it more difficult to fully understand. It is more subjective and it has tax consequences as well. Sellers and buyers of a business must come together on the price and terms of a transaction to take in account the value of all its goodwill that creates the vitality and profitability of the business.