>But I assume they got the goodwill into their balance sheet by typical mismanagement: Virtually every company will have a market value greater than their book

>But I assume they got the goodwill into their balance sheet by typical mismanagement: Virtually every company will have a market value greater than their book value. So any company that buys other companies will have goodwill on their balance sheet. Google, for example, has 18 billion dollars worth from all of their various acquisitions. Take a company like Nest for example. They had assets like patents, infrastructure, cash, accounts receivable, etc. If you add those all up and subtract their liabilities you get a book value of 100 million, as a totally made up number. Google comes along and buys them for 3.2 billion dollars. The transaction, from a book value perspective, has 3.2 billion in cash going out from Google and 100 million dollars of assets coming back. That looks like Google paid 3.2 billion for 100 million in assets, or in other words, just lost 3.1 billion dollars of value. To prevent that goodwill is added to the equation. The books have Google paying 3.2 billion dollars in cash for 100 million in assets and 3.1 billion in goodwill. Now Google paid 3.2 billion in cash for 3.2 billion in assets and it doesn't look like they lost value.