Duff & Phelps Publishes Second Annual European Goodwill Impairment Study

Duff & Phelps Corporation, the premier global valuation and corporate finance advisor, today released the 2014 European Goodwill Impairment Study, prepared in partnership with Mergermarket. The Study results are consistent with a general improvement in the financial health of European companies in 2013, with goodwill impairments declining by 25% from the prior year. 

Key study highlights include:

  • Total 2013 goodwill impairment for companies in the STOXX® Europe 600 Index was €49.6 billion, a 25% decrease from €66.4 billion in 2012.
  • 27.4% of companies within the STOXX® Europe 600 recorded goodwill impairments in 2013. 
  • Over two-thirds of all goodwill impairment was recorded in three industries: financials, utilities, and telecommunication services, with the financial sector reporting the most at €17.2 billion.  
  • Companies in Italy recorded the largest goodwill impairment at €16 billion, followed by the UK at €15 billion and France with €12 billion.
  • 72% of respondents to this year’s survey recognized goodwill impairment, compared to 41% last year, but they reported a decline in their magnitude, with 77% impairing less than 20% of their goodwill balance in 2013.

“While overall impairment levels were down in 2013, the economic news of late forebodes challenging times ahead for the Eurozone,” said Yann Magnan, Duff & Phelps Managing Director and Valuation Advisory Services leader for Europe. “If this trend is confirmed, that may trigger further goodwill impairments in the near future, and as a consequence necessitate an even more thorough, robust, and well-documented assessment of future cash flows and valuation assumptions."

The 2014 study analyzes financial results from 2010 through 2013 of companies in the STOXX® Europe 600 Index, which is comprised of large, mid and small capitalization companies across 18 European countries. The study also includes a survey of 240 European financial executives that focuses on goodwill impairment testing in accordance with IAS 36 Impairment of Assets. Duff & Phelps will host a webcast on 13 November at 14:00 GMT to review the study findings.

Duff & Phelps issued a companion study, 2014 U.S. Goodwill Impairment, on 14 October 2014. Both studies can be found at www.duffandphelps.com/GWIstudies. A third study on goodwill impairment in the Canadian market will be released in the coming weeks. 

About Duff & Phelps
Duff & Phelps is the premier global valuation and corporate finance advisor with expertise in complex valuation, dispute consulting, M&A and restructuring. The firm’s more than 1,000 employees serve a diverse range of clients from offices in North America, Europe and Asia. For more information, visit www.duffandphelps.com.
M&A advisory and capital raising services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory and capital raising services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd., which is authorised and regulated by the Financial Conduct Authority.

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