Monday, July 13, 2009

Worst Year Ever for Goodwill Impairments: KPMG Study

Goodwill impairments soared in 2008, doubling over 2007 levels for a surveyed group of companies.

KPMG completed the survey of approximately 1,600 public companies from January 2005 to December 2008.

Goodwill impairment charges at the companies were $340 billion in 2008, $143 billion in 2007 and $87 billion in 2006.

This result is not surprising given the current economic downturn and general financial market turmoil.

The study found that in 2008 the hardest-hit industries were banks, which accounted for about 23 percent of the total goodwill impairment charges. Materials, energy, media, and technology hardware and equipment companies were next. Other segments of the economy including pharmaceuticals and food and beverages took significant goodwill write-downs in 2008.

The largest two median goodwill impairment charge by industry were:
Banks--$411 million in 2008, from $49 million in 2007
Materials $394 million from $30 million in 2007.

Percentages of companies taking impairments by industry were:

  • Semiconductor and semiconductor equipment (31 percent)

  • Technology hardware and equipment (31 percent)

  • Media (30 percent)

  • Consumer durables and apparel (27 percent)

  • Diversified financials (25 percent)

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