Although goodwill remains the largest and most common intangible allocation, the proportion of value allocated to goodwill fell during the past year. Houlihan Lokey recently released its 12th annual Purchase Price Allocation Study, which this year reviewed the intangible asset allocations of 511 transactions during 2012.
The so called “Step 0” impairment test was expected to save firms time and money when it came to testing and reporting their goodwill balances. According to Duff & Phelps, 69% of private companies and 81% of public companies surveyed anticipated applying the Step 0 qualitative test in 2011. One year later, 52% of private companies and 43% of public companies reported actually using Step 0. So what are the issues that keep companies from using the Step 0 qualitative test as expected?
Commodity giant Glencore Xstrata recorded a goodwill impairment charge of $7.7 billion for its mining operations during the reporting period ended June 30, 2013. The writedown is a good reminder that value can change quickly, and there is no “bright line” regarding how soon an asset may be subject to impairment.
Cambridge Associates and the National Venture Capital Association recently released a study of more than 1,400 U.S. venture capital funds.
There’s an interesting phenomenon going on in the M&A markets so far in 2013. Valuations are pushing higher despite an overall slowdown in deal-making activity and higher proportions of equity relative to pre-financial crisis levels.
