Goodwill impairments on the rise, with more likely to come

BVWireIssue #79-3
April 15, 2009

The number of goodwill impairments has increased dramatically in correlation with the plunge in stock prices in 2008, a new study of the market response to goodwill impairment announcements from PricewaterhouseCoopers concludes. According to Goodwill Impairment Implications in the Current Market Turmoil, from the third quarter 2008 through March 20, 2009, Fortune 500 companies announced approximately $230 billion of impairments—more than twice the total impairments recorded by Fortune 500 companies during the three years leading up to the third quarter 2008.

Using the week ending January 30, 2009 as a benchmark, the report notes that 30 companies announced impairments representing approximately $25 billion in charges.

“With further stock price declines in the beginning of 2009 and continued uncertainty in the markets, more goodwill impairment announcements are likely around the corner,” warns Alberto Dent, a partner with PricewaterhouseCoopers' Transaction Services practice, adding that “recent goodwill impairment announcements typically have had a muted effect on stock prices by the time of the announcement.”

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