Goodwill Impairment Testing – Qualitative Assessment Support (“Step Zero” of ASC 350)

For companies that file audited financial statements and have goodwill on the balance sheet, it may be necessary to periodically assess whether it is more likely than not that one or more of your company’s reporting unit fair values are less than their carrying amount. This can be a relatively straight-forward exercise for companies in markets that have performed well in recent years with little risk of impairment. However, the assessment may not be as obvious for companies with variability in financial performance or industries that have seen market value declines in its publicly-traded market participants. Within the list of factors that ASC 350 suggests, current market conditions should be considered in making a qualitative assessment regarding impairment. Specifically, ASC 350-20-35-3C provides a list of factors to consider when performing the qualitative assessment, including: macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets. Therefore, as you look to make your qualitative impairment assessment, you may need to consider a market analysis to support your conclusion.

Whether or not you are attuned to the valuation process or not, ValuAnalytics can quickly and efficiently assist you by supplying the necessary valuation analytics from observed market data. Our deliverable can streamline the assessment of equity market conditions in a cost-efficient manner when you are not interested in hiring an appraiser. We provide a memo (with supporting exhibits) providing comparisons between your company and its publicly-traded peers. Our deliverable also helps you to assess whether your valuation might fall above or below your book value. Importantly, we do not focus on the qualitative aspects of your business (which are a critical component to the determination of a business’ value) and, therefore, are not rendering an appraisal opinion.

For your convenience, our memo is provided in word processor format (Microsoft Word) and exhibits are provided in spreadsheet format (Microsoft Excel) to allow for customization as needed for your internal files. Please contact us to request a redacted sample memo. Every engagement includes a 30-minute consultation to review the deliverable and answer any questions you may have regarding the analytics.

Need a full appraisal? Contact us to discuss your valuation requirements. ValuAnalytics is affiliated with Helios Consulting, Inc., a full-service business valuation firm, with professionals who have extensive experience with providing valuation services for goodwill impairment purposes. We will deduct the cost of any services provided by ValuAnalytics from your final business valuation engagement invoice if Helios Consulting, Inc. is engaged.