Joan is trying to decide if she wants to open her own hair salon, or buy an existing one. Curl Up and Dye is a very popular salon in town, and Joan knows the owner wants to retire soon. After approaching the owner of Curl Up and Dye, Joan was asked to pay an amount greater than the current value of the assets for the business. In addition to the value of the assets, the current owner thinks there is value in the name of the salon and the established client base. What is the current owner of Curl Up and Dye expecting Joan to pay for?

Question

Business

Kelvin Oconnor

17 June, 10:20

Joan is trying to decide if she wants to open her own hair salon, or buy an existing one. Curl Up and Dye is a very popular salon in town, and Joan knows the owner wants to retire soon. After approaching the owner of Curl Up and Dye, Joan was asked to pay an amount greater than the current value of the assets for the business. In addition to the value of the assets, the current owner thinks there is value in the name of the salon and the established client base. What is the current owner of Curl Up and Dye expecting Joan to pay for?

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Marcos Mercer · Answer 1

Goodwill

Explanation:

Goodwill is the value associated with a business brand name, its existing customers, ideal location, patents, and good employee relations. Goodwill emerges when a business is being acquired in its totality. It is considered as an intangible asset.

Goodwill increases the value of a business over and above the current value of its physical assets. Joan is being asked to pay for goodwill. Goodwill will represent the brand name, customers, and good relationships that Joan will inherit from the current owner of curl up and dye.