In earlier Part 1, how goodwill arises and what’s really is goodwill has been discussed. In this Part 2, we look at the factors that affects goodwill and the various methods of valuing goodwill(in other part of this series of articles)

Factors affecting goodwill:

• the nature/type of the business,

• the type of customer which such a business is inherently likely to attract,

• the expenditure already made in advertisements; promotions establishing the business,

• the reputation existing and

• the probabilities of the market.

[As described earlier, goodwill consists of the advantages a business has in connection with its customers, employees and outside parties with whom it has contact.]

The method to be adopted in valuing goodwill will depend upon the circumstances of each case. Append below are the various methods of Valuing Goodwill:

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