Company Value

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The goodwill ( "goodwill") is accounting the name for an intangible asset items in the company , by purchase for consideration by other companies or parts of companies created ( derivative goodwill as of internally generated goodwill represents) or a higher valuation of their own company ( original goodwill ).


The goodwill is an abstract, conceptual construction, with which the gap between yield-dependent and substance-dependent valuation should be bridged. Overall, goodwill is defined as the difference between the total company value and the sum of the fair values ​​of all assets and liabilities . Its amount is determined by factors that cannot be quantified or are difficult to quantify (profit prospects, customer potential, quality of management, importance to the industry, etc.), which make it difficult to record the balance sheet objectively. Under commercial law , within the scope of the principle of completeness ( Section 246 (1), sentences 1 and 2 HGB ), the legal or economic owner of an asset must also include it in his balance sheet . With this, the goodwill moves into the foreground and becomes important in the balance sheet through the capitalization requirement of § 246 Abs. 1 Clause 4 HGB, which has been in force since the BilMoG of May 2009 and irrefutably fakes the goodwill as an asset. With this activation requirement, however, the law makes a difference between original and derivative goodwill. At the same time, however, the principle of completeness also seeks to ensure, within the framework of creditor protection, that only those assets are accounted for that can serve the creditors as debt coverage potential.


A distinction must be made between original and derivative goodwill under both commercial and tax law.

Original goodwill

The original goodwill is intangible assets created by the accounting company itself, such as a higher valuation determined by the valuation of its own company, which does not result from the balance sheet net assets and has not yet been paid for in a transaction or self-created brands, printed titles, Publishing rights, customer lists or the like. These or other items for which it is not possible to differentiate the production costs from the expenses attributable to the goodwill are subject to a general prohibition on capitalization in accordance with Section 248 (2) HGB. As long as the self-created goodwill has not yet been substantiated by an objectively ascertainable consideration in the form of effective acquisition costs and thus confirmed on the market, it may not be accounted for in accordance with tax regulations; In terms of case law , the original goodwill only becomes concrete when the individual company concerned is sold.

The ability to be capitalized under commercial law is limited to internally generated intangible assets that meet the criteria of an asset. If the asset characteristics are met, the original goodwill can be capitalized , unless it is a question of brands, print titles, publishing rights, customer lists or comparable intangible assets of the fixed assets that were not acquired for consideration ( Section 248 (2) sentence 2 HGB) . The activation option thus relates in particular to development costs. It depends on whether the commercial law criteria of an asset are met.

The general prohibition of capitalization that applies to the original goodwill remains in place even after the BilMoG 2009. However, if internally generated intangible assets are capitalized, they are automatically blocked from distribution in accordance with Section 268 No. 8 HGB. Section 246 (1) sentence 4 of the German Commercial Code and Section 253 (5) sentence 2 of the German Commercial Code (HGB) merely fake the derivative goodwill as an asset, but not the original; the activation option in accordance with Section 255 (4) of the old version of the German Commercial Code no longer applies. This fiction, which is limited to the derivative goodwill, means that the properties of an asset must be proven when exercising the activation option for an original goodwill.

Derivative goodwill

In the case of derivative goodwill, this separate proof is not required because the law irrefutably presumes that the properties of an asset are fulfilled. If the purchase price for a company acquired against payment is higher than its net worth ( assets minus debts ), the positive difference must be capitalized as derivative goodwill. A prerequisite for a derivative goodwill is therefore the existence of a difference by which the consideration effected for the takeover of a company must exceed the value of the individual assets minus debts. If this difference is negative, it is a so-called “bad will”.

Goodwill corresponds to the amount that a buyer as a whole is willing to pay, taking into account future earnings expectations for the value of all tangible and intangible assets after deducting debts.


In accounting, “badwill” is negative goodwill. It arises in the context of capital consolidation if the purchase price for the investment is below the value of the net worth when a company is acquired. The “badwill” as a “negative difference” is to be declared as a negative earnings prospect or as a “lucky buy” and recognized as a provision in accordance with Section 301 (3) sentence 1 HGB (“difference from capital consolidation”). Under otherwise unchanged conditions, it thus reduces the net worth of the acquiring company. This provision may only be released if either the expected unfavorable development of earnings has occurred or it is certain on the balance sheet date that the “badwill” corresponds to a realized profit ( Section 309 (2) HGB). While the German Commercial Code (HGB) assumes a passivation requirement, IFRS 3.34 ff. After a renewed check (“reassessment”), the negative difference is to be recorded as income in the income statement.

"Lucky buy" (or "bargain purchase" according to IFRS 3.56) are those cheap company acquisitions where the purchase price is below the purchaser's expectation threshold or it later turns out that the purchase price paid is lower than the current value. There is a negative earnings outlook if the company to be acquired (the “target”) assumes worsened earnings prospects or even losses due to external or internal developments.


There is a general obligation to capitalize derivative goodwill; the law raises it by way of the irrefutable presumption as an asset ( Section 246, Paragraph 1, Clause 4 HGB). In this way, the law prevents a discussion in specific individual cases as to whether a certain derivative goodwill fulfills all the requirements of an asset or not. This is intended to dispel possible doubts and create legal certainty . There are no exceptions, such as exist for original goodwill, for derivative goodwill. The obligation to capitalize under commercial law is the same as the tax one in Section 7 (1) sentence 3 EStG . The previous activation option according to Section 255 Paragraph 4 Clause 2 and 3 of the old version of the German Commercial Code (HGB) is no longer applicable.

The derivative goodwill acquired in this way must be capitalized ( Section 246, Paragraph 1, Clause 4 of the German Commercial Code) and depreciated as planned ( Section 253, Paragraph 3 of the German Commercial Code). The derivative goodwill is considered a depreciable asset ( Section 246 (1) sentence 4 HGB). It has a useful life of 15 years under tax law ( Section 7 (1) sentence 3 EStG). According to Section 285 No. 13 of the German Commercial Code (HGB), an explanation of the period over which goodwill acquired against payment is amortized must be given. If the period cannot be reliably estimated, the goodwill must be amortized over a period of 10 years (Section 253 (3) sentence 4 HGB). 

An EU-wide industry survey by the EU accounting body Efrag showed that two thirds of those questioned would like a steady write-off of goodwill. This method allows companies to amortize goodwill from the balance sheet over several years or, as expressed in the title of the corresponding publication, to defuse the goodwill time bomb ticking on the balance sheet.

Consolidated Financial Statements

If the book value of a subsidiary at the parent company does not correspond to the balance sheet value of equity, a consolidation adjustment item arises. This difference is comparable to a derivative goodwill, but is shown on the liabilities side after equity. According to Section 309, Paragraph 1, Clause 1 of the German Commercial Code (HGB) there are special provisions for its depreciation.

international accounting

According to other international accounting rules, derivative goodwill must also be capitalized in the commercial balance sheet. This applies, for example, to US GAAP and IFRS . However, according to IFRS, there is an explicit prohibition of capitalization ( IAS 38 .48) for self-created goodwill (original GoFW ). The same applies to US GAAP (FAS 142.10). Since the derivative enterprise value is an asset with no estimated useful life, it is not amortized on a scheduled basis (impairment-only approach) . An annual depreciation is performed instead of the impairment test (impairment test) to IAS 36 .

Derivative goodwill in practice

In economically favorable times, with a high valuation of own shares or easily available outside capital at low interest rates, company takeovers are also made at inflated prices. This can result in high goodwill as derivative goodwill, which can only be justified on very optimistic assumptions.

In individual cases, a high derivative goodwill may be justified because z. B. significant synergy potentials are exhausted or important innovations are purchased. From a macroeconomic point of view, however, it is hardly understandable that in times of large company takeovers and mergers, the additional derivative goodwill appearing on the books is offset by correspondingly high real added value.

In accounting in the years after a company takeover, since the revision of the rules of IFRS 3 (IAS 36) in 2004, scheduled, periodic amortization of this goodwill is no longer permitted. However, there is an obligation to carry out an annual impairment test (“reassessment”). The company management has considerable leeway with regard to assumptions about the future course of business and the discount rate to be used . Imposing write-offs are sometimes deliberately delayed because the management does not want to be naked about the company takeovers. The study by the University of St. Gallen mentioned in a newspaper article on this topic speaks of a very hesitant depreciation practice. During the normal course of business, this leads to higher profit reports for the companies concerned and to a procyclical influence on the result. An audit expert describes the current practice of impairment tests according to IFRS as unsustainable. There is even talk of goodwill bubbles or a resulting time bomb. On the other hand, if companies with relatively high goodwill get into obvious difficulties and / or new management takes over, high write-offs are often made to clean up the balance sheet, so that the company's results are all the more negative. Therefore, due to the impact of goodwill accounting under IFRS, earnings have become more cyclical.

In Switzerland , a few medium-sized companies in particular, but also the Swatch Group and Georg Fischer AG , have switched their accounting from IFRS to Swiss GAAP FER . In addition to the lower effort, there is the advantage that the derivative goodwill can be written down even during good business operations (quote: “Getting rid of goodwill”).

Cautious equity analysts subtract all reported goodwill from equity in order to get a better idea of ​​a company's substance.

Examples of billions in amortization of derivative goodwill after company takeovers are:

  • In the banking sector at Unicredito , the largest Italian banking group, in the amount of 9.3 billion euros for 2013, at Monte dei Paschi di Siena , the oldest bank in the world, from 5.8 billion euros in 2011 and 2012 In Switzerland, too, Credit Suisse had to write off goodwill of 3.8 billion Swiss francs in 2015 because of the overpriced purchase of the US investment bank DLJ. This overdue adjustment was not made until the arrival of a new CEO towards the end of 2015.
  • In the telecommunications operator sector at Telecom Italia in the period from 2011 to the first half of 2013 in the amount of 14 billion euros; at Deutsche Telekom due to the merger of T-Mobile USA with PCS of 7.4 billion euros in 2013; at Swisscom after the acquisition of the Italian company Fastweb in 2007 for CHF 1.3 billion in 2011.

Individual evidence

  1. ^ Günter Wöhe : Introduction to General Business Administration , 1990, p. 801
  2. Wolfram Scheffler: Taxation of Companies II, Tax Balance Sheet Volume 2 , 2010, p. 101
  3. BT-Drs. 16/10067 of July 30, 2008, p. 47
  4. Patrick Velte: Intangible Assets and Goodwill , 2008, p. 196
  5. BFH judgment of May 16, 2002, Az. III R 45/98, BStBl. 2003 II, p. 10; Full text .
  6. BT-Drs. 16/10067 of July 30, 2008, p. 48
  7. Martin Thurner: The accounting of goodwill according to IAS / AFRS and HGB, 2007 , p. 29
  8. BT-Drs. 16/10067 , p. 35
  9. Christoph G. Schmutz, Tickende Zeitbombe Goodwill gradually defusing. In: Neue Zürcher Zeitung , February 12, 2015, p. 30
  10. BT-Drs. 16/10067 , p. 82
  11. Susanne Ziegert: A lot of hot air in the balance sheets of DAX companies. In: NZZ am Sonntag , April 7, 2013, p. 37
  12. Peter Leibfried: The market value is questioned more often. In: Handelszeitung , No. 41, October 8, 2015, p. 39
  13. Laura Frommberg: Time bomb. In: Handelszeitung , No. 6, February 11, 2016, p. 6
  14. Christoph G. Schmutz, Less transparency and still no darkroom. In: Neue Zürcher Zeitung , December 20, 2013, p. 30
  15. ^ Nikos Tzermias: Land consolidation at Unicredit. In: Neue Zürcher Zeitung , March 12, 2014, p. 30
  16. Christoph G. Schmutz: The late effects of an overpriced takeover. In: Neue Zürcher Zeitung , February 7, 2013, p. 33
  17. Ermes Gallarotti: Credit Suisse with a billion loss . , Neue Zürcher Zeitung from February 3, 2016
  18. Nikos Tzermias: Telecom Italia threatens junk status. In: Neue Zürcher Zeitung , August 3, 2013, p. 28
  19. ^ Claudia Aebersold: Deutsche Telekom with high book loss. In: Neue Zürcher Zeitung , November 9, 2012, p. 32
  20. Matthias Müller: Fastweb is becoming a billionaire grave. In: Neue Zürcher Zeitung , December 15, 2011, p. 25