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What is “goodwill”?

April 26, 2017goodwill

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What is “goodwill”?

2 Answers

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Goodwill is a business or trademark owner’s image, relationship with customers and suppliers, good reputation, and expectation of repeat patronage. It is the value a trademark owner builds in a brand.

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Goodwill is the difference between the total value of a business and the value of inventory, equipment and other “hard” assets. Every business has goodwill unless it is closed down for failing badly. The amount to pay for goodwill depends on the cash flow of the business and its general attractiveness. If buyers did not pay for goodwill, sellers might as well sell off their equipment and close down rather then sell as an on-going business.