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GoodwillStudy of Goodwill & Goodwill Impairment Trends
January 2016Alps Venture Partners
A M E R I C A S | A S I A PA C I F I C | E U R O P E
1pageA L P S V E N T U RE P A R T N E R S
ContentsGoodwill Introduction & Concept Global Scenario
Region United States & Canada Asia & Pacific Industries Information & Technology Consumer Discretionary Consumer Staples Healthcare
Compliances & Valuations
1
2
3
4
Goodwill & Impairments Study
2pageA L P S V E N T U RE P A R T N E R S
info@alpsvp.com
Goodwill is the excess of the purchase price paid for an acquired entity and the amount of the price not assigned to acquired assets and liabilities. It arises when an acquirer pays a high price to acquire another business/asset over and above the identified assets.If the fair value is less than carrying value (Goodwill is said to be impaired), the goodwill value needs to be reduced so the carrying value is equal to the fair value. The impairment loss is reported as a separate line item on the income statement, and new adjusted value of goodwill is reported in the balance sheet.We have relied on CapitalIQ for the current analysis. Our methodology for selection of Goodwill and Goodwill Impairment is presented below:
Goodwill Goodwill ImpairmentWe have collated the data points for goodwill greater than $20M reported by companies across regions and Industries.
Any positive Goodwill Impairment is considered for the analysis. We have not considered negative impairments (goodwill add back) in the analysis.
Goodwill - Global
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$1,061
$937
$325
$1,744
$919
$1,164
$799
$444
$549
$362
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Accumulated Goodwill 2015 ($ billion)We have observed majority of the
goodwill is concentrated in Financial sector followed by Industrials in 2015.Globally $8.3 trillion of accumulated goodwill is recorded across Industries and Regions.
2011 2012 2013 2014 20150
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Accu
mul
ated
Goo
dwill
($ b
illio
n)
Goodwill Impairment - Global
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$561 $378$724
$6,440
$1,186
$2,595
$280 $1,077
$302$1,287
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Goodwill Impairment 2015 ($ Million)Majority of the Goodwill Impairment is
recorded by Financial Sector followed by Utilities and Materials in 2015.Globally $14.8 billion of goodwill is impaired across Industries and Regions.
2010 2011 2012 2013 2014 20150
5
10
15
20
25
30
35
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
Impa
ired
($ b
illion
)
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
United States and Canada
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United States and Canada Region has witnessed $1,863 billion of Mergers & Acquisitions in 2015 and $7,200 billion in past 5 years. Goodwill is concentrated in these primary industries:
Industry Accumulated Goodwill ($B)
Diversified Banks 351.7
Regional Banks 255.9
Integrated Telecommunication Services 148.0
Aerospace and Defense 141.1
Packaged Foods and Meats 138.9
Pharmaceuticals 113.6
Movies and Entertainment 110.3
Oil and Gas Storage and Transportation 102.5
Technology Hardware, Storage and Peripherals 102.2
Data Processing and Outsourced Services 96.4
Electric Utilities 85.5
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
United States and Canada – Goodwill & Impairment
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Accumulated Goodwill ($ billion)
2011 2012 2013 2014 20150
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Good
will
($ b
illio
n)
2010 2011 2012 2013 2014 20150
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Good
will
Impa
irmen
t ($
Mill
ion)
Goodwill Impairment ($
Million)
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
Asia & Pacific
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Asia & Pacific Region witnessed Mergers & Acquisitions aggregating $1,110 billion in 2015 and $4,440 billion during the past 5 years. Goodwill is concentrated in these primary industries:
Industry Accumulated Goodwill ($B)
Diversified Banks 76.3
Industrial Conglomerates 44.8
Wireless Telecommunication Services 38.7
Integrated Telecommunication Services 36.1
Pharmaceuticals 27.3
Electric Utilities 25.6
Technology Hardware, Storage and Peripherals 23.3
Oil and Gas Exploration and Production 19.5
Packaged Foods and Meats 19.3
Food Retail 17.4
Integrated Oil and Gas 16.7
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
Asia & Pacific – Goodwill & Impairment
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2011 2012 2013 2014 20150
100
200
300
400
500
600
700
800
900
1,000
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Good
will
($ b
illion
)
Goodwill Impairment ($
Million)
2010 2011 2012 2013 2014 20150
1,000
2,000
3,000
4,000
5,000
6,000
Consumer Discretionary Consumer StaplesEnergy FinancialsHealthcare IndustrialsInformation Technology MaterialsTelecommunication Services Utilities
Good
will
Impa
irmen
t ($
Mill
ion)
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
Accumulated Goodwill ($ billion)
INFORMATION TECHNOLOGY | CONSUMER STAPLES | HEALTHCARE
Industry Focused Analysis
Information Technology
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2011 2012 2013 2014 20150
100
200
300
400
500
600
700
800
900
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
($ b
illio
n)
Primary Sub-Industry Accumulated Goodwill ($B)
Application Software 104
Technology Hardware, Storage and Peripherals 130
Data Processing and Outsourced Services 114
Internet Software and Services 93
IT Consulting and Other Services 90
Systems Software 77
Communications Equipment 66
Semiconductors 46
Electronic Equipment and Instruments 22
Electronic Components 14
Semiconductor Equipment 12
Home Entertainment Software 12
Technology Distributors 11
Electronic Manufacturing Services 9
Information Technology witnessed $280 million of impairment in 2015. It is the rising sector of new millennium with $2,500 billion of M&A transactions during the last 5 years.
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
Information Technology
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2010 2011 2012 2013 2014 20150
200
400
600
800
1,000
1,200
1,400
1,600
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
Impa
irmen
t ($
Mill
ion)
Primary Sub-Industry GoodwillImpairment ($M)*
Semiconductors 106.3
Electronic Components 93.3
Internet Software and Services 20.9
Electronic Manufacturing Services 14.0
IT Consulting and Other Services 12.5
Electronic Equipment and Instruments 7.4
Application Software 7.4
Technology Distributors 6.6
Data Processing and Outsourced Services 4.1
Systems Software 3.7
Technology Hardware, Storage and Peripherals 2.9
Communications Equipment 0.7
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
Consumer Discretionary
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2011 2012 2013 2014 20150
200
400
600
800
1,000
1,200
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
($ b
illio
n)
Primary Sub-Industry Accumulated Goodwill ($B)
Cable and Satellite 155.6
Movies and Entertainment 128.9
Broadcasting 85.9
Publishing 85.7
Apparel, Accessories and Luxury Goods 67.9
Advertising 64.1
Automobile Manufacturers 51.2
Restaurants 49.6
Auto Parts and Equipment 49.1
Casinos and Gaming 40.5
Hotels, Resorts and Cruise Lines 38.8
Internet Retail 23.5
Specialty Stores 21.5
Department Stores 18.0
Education Services 17.0
Catalog Retail 16.2
Apparel Retail 13.8
Consumer Discretionary witnessed $560 million of impairment in 2015. M&A transactions aggregating $3,075 billion during last 5 years.
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
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Consumer Discretionary
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2010 2011 2012 2013 2014 20150
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
Impa
irmen
t ($
Mill
ion)
Primary Sub-Industry GoodwillImpairment ($M) *
Education Services 98.4
Specialized Consumer Services 87.0
Hotels, Resorts and Cruise Lines 67.9
Auto Parts and Equipment 64.3
Consumer Electronics 50.3
Automobile Manufacturers 25.9
Publishing 23.3
Apparel, Accessories and Luxury Goods 21.9
Home Furnishings 21.6
Textiles 19.8
Casinos and Gaming 18.0
Movies and Entertainment 13.2
Advertising 10.9
Department Stores 10.9
Distributors 8.6
Broadcasting 6.3
Tires and Rubber 3.4
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
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Consumer Staples
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2011 2012 2013 2014 20150
100
200
300
400
500
600
700
800
900
1,000
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
($ b
illio
n)
Primary Sub-Industry Accumulated Goodwill ($B)
Packaged Foods and Meats 253
Brewers 161
Food Retail 98
Household Products 79
Hypermarkets and Super Centers 74
Personal Products 61
Soft Drinks 55
Tobacco 51
Drug Retail 47
Food Distributors 25
Distillers and Vintners 21
Agricultural Products 12
Consumer Staples witnessed $376.0 million of impairment in 2015. M&A transactions aggregating $1,547 billion in this industry during the last 5 years.
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
13
Consumer Staples
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2010 2011 2012 2013 2014 20150
500
1,000
1,500
2,000
2,500
3,000
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
Impa
irmen
t ($
Mill
ion)
Primary Sub-Industry GoodwillImpairment ($M) *
Soft Drinks 131.1
Packaged Foods and Meats 124.0
Agricultural Products 78.5
Drug Retail 31.1
Hypermarkets and Super Centers 4.6
Household Products 3.8
Brewers 2.2
Distillers and Vintners 1.2
Food Retail 0.8
Personal Products 0.7
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
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Healthcare
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2011 2012 2013 2014 20150
100
200
300
400
500
600
700
800
900
1,000
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
($ b
illio
n)
Primary Sub-Industry Accumulated Goodwill ($B)
Pharmaceuticals 366
Healthcare Services 145
Healthcare Equipment 127
Managed Healthcare 74
Healthcare Facilities 61
Healthcare Distributors 41
Life Sciences Tools and Services 38
Biotechnology 36
Healthcare Supplies 20
Health Care Technology 12
Healthcare witnessed $1,185 million of impairment in 2015. M&A transactions totaling $1,570 billion during the last 5 years.
*Source: CapitalIQ. Goodwill and Goodwill Impairment as recorded in CapitalIQ.
15
Healthcare
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Primary Sub-Industry GoodwillImpairment ($M) *
Healthcare Facilities 635.1
Health Care Technology 417.5
Biotechnology 64.5
Life Sciences Tools and Services 30.4
Pharmaceuticals 24.2
Healthcare Distributors 6.8
Healthcare Services 5.6
Healthcare Equipment 1.1
Healthcare Supplies 0.3
Managed Healthcare 0.0
2010 2011 2012 2013 2014 20150
200
400
600
800
1000
1200
1400
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Good
will
Impa
irmen
t ($
Mill
ion)
*Source: CapitalIQ. Industry Goodwill refers to goodwill reported in year 2015 as in CapitalIQ.
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Alps Venture Partners has established a team of experts that have experience in valuing businesses across diverse industry sectors and all developmental stages; ranging from clients with seed funding to pre-IPO stage. With the team having experience of both valuations and audits, our detailed and insightful valuation appraisal reports, along with our responsive support, help our clients easily pass through any stringent audit review process in a smooth, efficient and time-bound manner.Tax Compliance Financial Reporting Strategic Valuation
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Our business valuation experienced team along with the team of veteran Patent lawyers position us uniquely to assist clients in completing annual Goodwill and Investment Impairment testing.
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