Goodwill impairment by U.S. firms up 18% in 2014, per D&P study

BVWireIssue #159-2
December 9, 2015

The dollar amount of goodwill impairment recorded by U.S. companies rose 18%, to $26 billion, in 2014, according to a report from Duff & Phelps. The consulting firm’s “2015 U.S. Goodwill Impairment Study” says that the number of goodwill impairment events increased by 24%, to 341, for the same period, while the average impairment amount fell 5%, to $75 million.

Energy hit hard: The energy sector was particularly hard hit, with the amount of goodwill impairment nearly tripling in 2014, to $5.8 billion, primarily due to charges taken in the exploration and production sector. Among other industries, consumer staples, financials, information technology, and industrials all recorded an increase in goodwill impairment, while healthcare, consumer discretionary, telecom, materials, and utilities all recorded declines.

The study also finds that the qualitative goodwill impairment test known as Step 0 by public-company survey respondents indicates record use, increasing to 54% from the 43% reported in 2014.

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