U.S. public firms took $143 billion in impairments in 2020, the most in at least a decade. Read the recent coverage of our report in the Wall Street Journal. Read More Chevron

2020 U.S. Goodwill Impairment Study

February 2021

The Duff & Phelps 2020 U.S. Goodwill Impairment Study, now in its 12th year of publication, examines general and industry goodwill impairment (GWI) trends of over 8,800 U.S. publicly traded companies through December 2019.

This edition also gives a preview of the impact of the COVID-19 pandemic on goodwill impairments taken by U.S.-based public companies. Times of crises and significant economic recessions always place an additional focus on impairments recorded by publicly traded companies.

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Total GWI recorded by U.S. publicly traded companies fell by 10% from $78.9 billion (bn) in 2018 to $71 bn in 2019. However, this was still the second highest level after the 2008 financial crisis.* A single GWI event of $22.1 bn recorded by General Electric (GE) had the highest impact on the 2018 aggregate GWI amount. If GE’s impairment event was excluded from the 2018 totals, aggregate GWI would have risen by 25% in 2019.

The chart below shows trends in GWI in dollar amount and number of impairment events over the last five years.

Goodwill Impairment History

2020 U.S. Goodwill Impairment Study

For seven of the 10 industries analyzed, GWI increased or remained at similar levels, with Industrials and Consumer Discretionary being notable exceptions. Industrials saw its aggregate GWI drop by over 80% in 2019, but that was driven by a single large event in 2018 (GE’s $22.1 bn). 

Communication Services, Information Technology and Consumer Staples were the top three industries with the largest increase in GWI in 2019. Consumer Staples reached a new record high in aggregate GWI, while Communication Services saw its highest level since 2007.

The graphic below highlights trends in the aggregate GWI amount for each of the 10 industries analyzed over the period 2015-2019.

Goodwill Impairments by Industry ($ in Billions)

Looking at 2020, the COVID-19 pandemic was the biggest challenge for U.S. companies. At the time of writing, the disclosed top 10 GWI events for 2020 reached a combined $54 bn, far surpassing the top 10 in 2019 (at $37.4 bn). Although full 2020 calendar year-end results for U.S. public companies will not be known for some time, early reporting points to overall GWI already exceeding $120 bn in 2020. For perspective, in 2008, at the height of the global financial crisis, U.S. companies recorded a total GWI of $188 bn, according to our prior studies. Energy is the most impacted industry thus far, a reflection of the collapse in global oil prices following the classification of COVID-19 as a pandemic. **

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Notes

*The 2020 Study only captures companies that are incorporated in the U.S. Therefore, certain companies that are incorporated outside of the U.S. are excluded from our analyses, even if they are viewed as U.S. companies by financial markets. If such companies were included, total GWI in 2019 would, at a minimum, increase by Schlumberger’s $8.8 bn impairment, leading to an aggregate $79.9 bn and thereby exceeding the 2018 GWI total amount.

**Data for calendar year 2020 was compiled on January 28, 2021. The identity of the top 10 largest impairment events in 2020 may change once all companies report full-year 2020 results.

The 2020 Study has been featured in Bloomberg Tax, Compliance Week, Accounting Today and CFO Dive.

 

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