Goodwill includes non-physical assets that are not required for the day-to-day operations of your business.
These non-physical assets are often difficult to quantify, but they add value to the business above and beyond the physical assets.
They include, but are not limited to: the company's brand name, a company’s solid customer base, having great customer relations, having great employee relations, proprietary technology, and some intangible asset(s).
A business’ Goodwill refers to the portion of the overall valuation that is attributable to the value of the business' ongoing operations. This is primarily determined by the historical financial performance and the business' ability to generate profitability and cash flow, and is also intended to reflect the value derived from their brand, customer base and any intellectual property.
Business goodwill is a key intangible asset that represents the portion of the business value that cannot be attributed to other business assets. The business goodwill reflects the synergy among various assets used by the business to produce income. When your goodwill is maximized, it impacts your valuation ensuring that you will receive maximum value when you decide to sell your business.