Goodwill

Question 1

How do you calculate Consolidated Goodwill?

Answer 1

Consolidated Goodwill =
Acquirer Goodwill

Target Goodwill

Deal Goodwill
– Target Goodwill (pre-existing)

Question 2

How is Deal Goodwill calculated?

Answer 2

Deal Goodwill =
Equity Purchase Price
– Fair value of Net Identifiable Assets acquired
(+ Implied Goodwill for NCI if full goodwill method is used)

Question 3

What is “Shareholder Equity bought at fair value”?

Answer 3

It equals:

Target Book Equity

Asset step-ups (PPA adjustments)
– Asset step-downs
– Target existing goodwill

Question 4

How do you calculate implied goodwill for non-controlling interest (NCI)?

Answer 4

Implied Goodwill (NCI) =
Fair value of NCI
– NCI % × Fair value of identifiable net assets