How Valuable Is the Goodwill Of Your Business?

Goodwill. What is it? Does your business have any? If so, how do you measure it? In simple words, goodwill can be synonymous with a “good-name,” “a good reputation” and/or “a wide business connection” which helps the business to earn more profits than that of a newly started business. Goodwill is an intangible, salable asset arising from the reputation of the business and its relations with its customers, distinct from the value of its stock and other tangible assets. Goodwill is a term that is used to reflect a portion of the market value of a business entity.

Historical academic and accounting icons, such as Professor Dicksee, describe goodwill: “When a man pays for goodwill, he pays for something which places him in the position of being able to earn more than he would be able to do by his own unaided efforts.” According to J. O. Magee “The capacity of a business to earn profits in future is basically what is meant by the term goodwill.” According to Lord Justice Lindley “The term goodwill is generally used to denote benefit arising from connections and reputation.” John Scott has defined goodwill as “Goodwill is nothing more than the probability, that the old customers will resort to the old place.” In the words of Lord Macnaghten, “Goodwill is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connections of a business. It is the attractive force, which brings in customers. It is one thing which distinguishes an old established business from a new business at its first start.”

After reading that, you may be scratching your head wondering how something so seemingly vague and invisible can be assessed and valued as an asset of your business—something that a potential buyer would pay for. There are two common approaches to assessing a company’s goodwill. One uses historical financial data; the other considers the industry and region in which the company operates. Furthermore, it’s important when buying a business, that the goodwill is inherent in business itself, and is not based solely on the owner. Don’t underestimate the power of goodwill. Consider the limited physical assets of Facebook and the level of its goodwill. Then consider a company with a high value of physical assets but very limited
goodwill. Which one is more likely to attract paying customers on a long term basis? Which one is more valuable? More salable?

BC Business Brokers have in-depth university training in the 12 common accounting methodologies of Business Valuation, in addition to understanding the impact of intangible assets (like goodwill) in the context of industry trends and geographical location. If you are contemplating the sale of your business, or considering small business ownership, contact the Sunbelt Nanaimo office – we can help you. We are licensed realtors specializing in business transactions and commercial property.

Brewing Up A Business

It’s an exciting time for the BC microbrewing industry with provincial sales reaching a record high. British Columbians seem to be veering away from the big beers and gravitating towards “craft breweries”, also known as “microbreweries”.  Some use the terms synonymously, others say there’s a difference between the quantity produced and methodologies used. But one thing is certain: In Canada’s $8 billion beer industry, the numbers are up for traditional ales and down for industrial commodity beer.  According to Rick Green, Executive Director of the Craft Brewers Association of British Columbia, “BC is basically the leading province in the craft beer movement.”  That’s all great news for Jennifer Lewis and Travis Findlater, the new owners of Fat Cat Brewery in Nanaimo, who plan a relaunch of the newly branded business as “Wolf Brewing Co.” in February. According to Jennifer Lewis “the recipes will remain the same with 1 or 2 new ales coming to the market.” Michael Naprawa, of BC Business Brokers is pleased that this longstanding, local brewery has been sold to a team of owners with new vision and new energy to take the business to the next level.”  Lewis and Findlater were relieved that the overwhelming details of the business transaction were handled by a business brokerage firm in Nanaimo, BC Business Brokers, the company that marketed the business and negotiated the sale.  “We were very pleased with the services provided by Michael Naprawa—his business advice and professional contacts were invaluable to making the transfer of ownership go smoothly” said Lewis. Learn more on:www.youtube.com/watch?v=nydVgJ_9kdY


If you are considering small business ownership or the sale of your business, feel free to contact BC Business Brokers.  We can help.  Visit our local website at www.bcbusinessbroker.ca or www.sunbeltbroker.ca or phone 1-877-289-0969

What is Sunbelt?

Company Overview

Sunbelt is the largest business brokerage firm in the world, making it the dominant force in the industry. Since 1978, the Company has evolved into a business brokerage network including 300 offices throughout the United States and 30 foreign countries. We currently broker the sale of approximately 4,000 businesses each year.

Our 1,400 business brokerage professionals are dedicated to providing our buyers and sellers with superior service throughout the entire buying or selling process. Sunbelt's experienced methods make the transition smooth and uncomplicated.

Sunbelt business brokerage offices can help those buying or selling a business in any of the four areas of the private business market:


Main Street Businesses

General businesses that usually have gross sales of $1,000,000 or less per year and have 20 or fewer employees (95% of US businesses fall into this category).
Franchise Sales Sunbelt is pleased to be the business brokerage firm that represents a select group of franchisors with a proven track record of success in their field. When you buy a franchise, you are in business for yourself, but not by yourself. These franchisors have proven business systems and known names in their respective markets.


Franchise Resales
Thousands of existing franchise businesses resell every year, often for "human driven" reasons: the owner retires, dies, is in poor health, is getting a divorce, is relocating or experiences other life-changing circumstances। We, as a business brokerage, always want to know why someone is selling a business, and so do you. Depending on the circumstances, the sale of an existing franchise may present a good business opportunity for the buyer. An existing franchise has the advantage of being an existing business plus the ongoing support provided by the franchisor. Those looking to buy a franchise can benefit from the professional assistance provided at Sunbelt.

Middle Market

Sunbelt is a market leader in managing middle market transactions in the range of $3,000,000 - $30,000,000.