Almost half of the value in M&A deals is made up of goodwill, a report by
Ernst & Young has found.
Transaction values of 709 companies across 21 countries were surveyed in the
report. Clearly identified intangible assets, such as brands and patents,
represented on average 23% of enterprise value. Meanwhile, 47% of enterprise
value of the average company was ascribed to goodwill.
With companies forced to revalue assets in response to changing market
conditions under fair value, having so much goodwill as a proportion of
enterprise value could expose acquired companies to unpleasant asset write-downs
and impairment charges, the report says.
Of the sectors surveyed, the consumer products sector had the highest average
level of goodwill, at 65% of enterprise value. The technology sector was close
behind, with goodwill comprising 60% of enterprise value on average.
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team
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Smith & Williamson has added Jim Clark and Philip Marsden, of Marsden Clark Corporate Finance Limited, to its corporate finance team.