Goodwill evaporates from European stocks
European companies are likely to write off €165bn this year as they review the value of their 'goodwill'.
European stocks face more turbulence. In good times, companies pay a premium known as 'goodwill' when they take over another firm. This is a reflection of the value of the target's intangible assets such as its brand name or market share.
Accounting rules force companies to review goodwill annually, notes Alexis Xydias on Bloomberg.com, and with the good times well and truly over the pan-European market fell by 46% last year hefty write-downs are now on the cards.
JPMorgan says Europe faces the largest reductions in the value of goodwill, with €165bn likely to be written off this year. In the short term, "it's a catastrophe for share prices", says Jerome Forneris of Banque Martin Maurel. Expect some "bad surprises".
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But on the plus side, it "cleans things up" and reduces overall uncertainty, says Guillaume Duchesne at Fortis Private Banking.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Could your family be at risk of an unexpected tax bill? How to keep your loved ones in the loop
Many families are out of the loop when it comes to planning the financial aspects of both retirement and inheritance
-
Rightmove: Glut of homes for sale in southern England drives asking price drop
Asking prices are 0.1% lower than a year ago, according to the property website, driven by challenges in affordability-stretched London and the south