Carla Nunes, Managing Director in the Office of Professional Practice, was recently interviewed by the Financial Times and shared insights into Kroll’s goodwill impairment data.
Some of the world’s biggest companies are facing multibillion-dollar writedowns on recent acquisitions as a wave of dealmaking gives way to a new era of economic uncertainty and higher interest rates.
In Europe, the size of goodwill writedowns has not risen so far. The 10 largest in the STOXX 600 totalled €6.4 billion (bn) last year, down from €17 bn in 2021.
“European companies have later financial year-ends and less frequent reporting,” explained Carla, suggesting that more goodwill impairments could come in the spring.
And while companies are required to subtract goodwill writedowns from their profit, many exclude them from the “adjusted” numbers they highlight in their earnings reports.
Carla commented: “Goodwill impairments provided a readout on the quality of a company’s dealmaking. You can tell if you are getting a return on your investment or if the buyer may be overpaying for these businesses.”
Subscribers of the Financial Times can read the full article here.