Berkshire Hathaway Letters to Shareholders: 1965-2024

by Warren Buffett

But that statement applies, naturally, only to true economic Goodwill. Spurious accounting Goodwill—and there is plenty of it around—is another matter. When an overexcited management purchases a business at a silly price, the same accounting niceties described earlier are observed. Because it can’t go anywhere else, the silliness ends up in the Goodwill account. Considering the lack of managerial discipline that created the account, under such circumstances it might better be labeled “No-Will”. Whatever the term, the 40-year ritual typically is observed and the adrenalin so capitalized remains on the books as an “asset” just as if the acquisition had been a sensible one.

The silliness ends up in the Goodwill account