Glossary · Reading the business
Negative goodwill
In short
This occurs when you buy a business for less than the fair value of its identifiable net assets. It suggests you've found a bargain, often due to a distressed seller or unique market conditions.
What it means in a deal
While rare, negative goodwill means you're getting more assets than you paid for. It's a strong indicator of a bargain purchase. You'll need to properly account for this difference, usually by reducing certain non-current assets or recognizing a gain on the purchase.
Related terms
Common questions about Negative goodwill
- What if the business I'm acquiring has *negative goodwill*?
- What if the business I'm acquiring has significant negative working capital at closing?
- How does negative working capital at the time of acquisition impact SBA 7(a) loan eligibility?
- Can I use an SBA 7(a) loan to purchase a business with a negative net worth?
- Can an SBA 7(a) loan be used to purchase a business with a negative net worth?
- Can an SBA 7(a) loan be used to purchase a business with a negative tangible net worth?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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