Goodwill

Some may ask if “is goodwill in business a real concept and if so is it transferable?” Goodwill does exist in business and is transferable but that is highly dependent on the market and the particular circumstances of the business. Goodwill or a sustainable competitive advantage must be based on a distinctive competency. An activity an organization is better able to execute than any of its competitors which allows for a competitive example in the marketplace.

For example Toyota has developed a “lean production system” which delivers low cost high quality vehicles superior to the other automakers. If a restaurant is known for some unique or special product in which it has developed a large following based on certain secret ingredients that cannot be reversed engineered; that could be goodwill that is transferable. That is provided the reputation and following was built on the “secret recipe” like Bush Beans rather than the talents or promotion of the former owner. Also of course the new owners must be able to buy the “secret recipe” and have the former owner sign a non use, non-compete clause.