Definition
When you acquire a company for less than the fair value of its identifiable net assets, essentially buying a dollar for seventy cents. Also called a 'bargain purchase,' it's as rare as it sounds and usually indicates something's wrong.
Example Usage
The acquisition resulted in negative goodwill, which sounds great until you realize it means the market thinks those assets are worth even less than we paid.
Origin
M&A accounting terminology, opposite of the more common goodwill concept
Fun Fact
Under current accounting rules, negative goodwill gets recognized immediately as a gain, but smart accountants view it as a red flag that screams 'hidden problems ahead.'
Source: IFRS and GAAP acquisition accounting standards
Related Terms
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See “negative goodwill” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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