Goodwill

Goodwill is a monetary value assigned to an intangible asset of a company, usually 'reputation' and 'customer base'.

For example, an ancient £1 stamp may sell for £10. In this case, its tangible value is £1, and the goodwill associated with it is worth £9.

Goodwill is an example of an ‘intangible asset’.

The balance sheet value of professional services firms or law firms, which depend entirely upon reputation and customer base is formed almost entirely from goodwill. By comparison, capital heavy businesses, such as power plants, will have more tangible assets than goodwill.