Goodwill

DefinitionGoodwill is the part of a purchase price that exceeds the value of a business’s identifiable tangible and intangible assets. It represents what a buyer pays for reputation, customer relationships, brand, and the earning power those create — the reasons a going concern is worth more than the sum of its equipment and inventory. In small-business deals, goodwill is usually the largest component of the price, which is why the earnings behind it have to hold up under scrutiny.