Ivanov A.E.South Ural State University - National Research University, Chelyabinsk, Russian Federation ivanov.chel@list.ru
The valuation of goodwill while planning mergers and acquisitions is a major procedure, which enables an investor to determine the maximum amount of the excess price of the acquired company over the value of its net assets, which is reasonable to spend. At the present time, there is no uniform methodology for such a valuation. For companies, the shares of which are listed on the stock exchange, the valuation of goodwill can be determined based on the quoted market prices of the shares. The non-public companies, as a rule, tend to use the methods based on the use of the income approach to business valuation in its pure form, or a combination of the income approach methodology with individual instruments of the comparative and cost approaches. The article describes the four most common methods of valuation of goodwill for non-public companies: the method of excess earnings; the leverage method; the relief from royalty method, and the method based on the Edwards-Bell-Ohlson model. The author highlighted the common mistakes that frequently appear in the domestic scientific literature in the description of some of these methods, and he identified the advantages and disadvantages of each method, as well as provided the expert opinions regarding their applicability in the valuation practice. The autor arrived at a conclusion that there was a general shortcoming in all methods of valuation of goodwill of non-public companies that are used in the planning of integration transactions: they allow only a certain degree of accuracy to valuate the size of goodwill, but do not explain at what cost it was created ("black box"). The paper formulates the direction of further research of the author: the construction of the model allowing to give such an explanation, and to evaluate the contribution of each element of the goodwill in its aggregate value.
Keywords: goodwill, synergetic effect, synergy, business valuation, integration, mergers and acquisitions
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