Posted at 15:24h
There’s an interesting set of comments in this week’s The Economist
in an article called “Goodwill Hunting
” which suggests that corporate ‘write-downs of goodwill’ mask the admission of past M&A failure. But who reads or understands the intricacies of such obscure financial numbers? A good example is HP’s ‘cathartic’ write-down of some $18bn of goodwill, effectively rolling in the Autonomy debacle as well as other past failures, e.g. Compaq. The article goes on to suggest that it generally takes about 5 years for such a failure to de-toxify. I guess at that point, directors can declare mea culpa
with little backlash on the basis that they were probably not at the helm when the original acquisition took place (Autonomy may be an exception but we wait and see).