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Sauron
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Hey, Oaktoad, f_ck YOU TOO. "Legend in ym own mind" says you? I say, where were you when we were having the party a few days ago?
If you can't walk the walk, don't talk the talk.
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Thai Girls : Meet Sexy Thai Girls
Posted on: 2:14 am on Mar. 2, 2003
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oneeye
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The definition and valuation of goodwill is something that confounds even the best investment bankers. It is a highly subjective term and calculation. It is also highly misunderstood and overused. Frankly, it may not even need to be used in the case of selling Eden, depending on the valuation method being used to price the business and on the financial reporting needs of whoever buys Eden.
In terms of actually valuing a business for sale or purchase, technically the most correct way to measure the value is to measure future cash flows and then, using a time-value-of-money calculation, discount the value of these future cash flows back to the present, in present-day dollar value. For that is what a business owner is purchasing: future cash flows, or future returns generated by the business.
This cash-flow based valuation has very little to do with the asset value of the company acquired (accounting jocks and bankers will argue with me over depreciation impacts on cash flow, but I&' m being very simplistic here). However, when a company is acquired, the buying company&' s balance sheet changes. A certain amount of cash went out to buy the acquired business, based on the cash-flow valuation, and as well a certain value of physical and cash assets were acquired. These numbers very rarely match, because companies consider their productive assets to not only be cash and physical assets, but knowledge, key human resources, brand and customer loyalty.
Goodwill is used to make the balance sheet balance. Very simplistically, it is the value of the business acquired (in the most simplistic terms, the cash paid for that business), less the value of the cash and physical assets acquired. Goodwill is a number created by taking the value of the physical and cash assets and subtracting them from the cash paid for the business. It is therefore a result, not a starting point, of the valuation.
Goodwill does not even enter into the cash-flow based calculation. However, the amount of goodwill created in a transaction is something that bankers and companies will argue like hell over and adjust the price of the company in order to more properly estimate – if the buying company thinks the management of the other company is a bunch of dummies, they are going to make sure that the acquisition doesn&' t suddenly plop a ton of goodwill on the balance sheet, or else shareholders will be angry.
Since it is measuring the premium paid for a business beyond the assets that are actually acquired, goodwill therefore subjectively measures the value of the brand, management, loyal customers, etc. of the acquired company, which when an acquisition is made are of course also bought. These are intangible assets, but surely assets as they too are essentially things owned by the business that generate returns. Goodwill is a result of other calculations, not itself something quantified in and of its own right.
In the case of valuing Eden, one could value the business based on the value of the assets. However, valuing a business for purchase based on assets is an incredibly simplistic and inaccurate thing to do to capture the real value of a company. Essentially it says that the business is worth absolutely nothing beyond the physical and cash assets – essentially, if Eden were valued based on the building, we would be saying that Marc and the girls add no value whatsoever. Goodwill, at least in terms of representing the cash paid less the value of the building, beds, VCRs, porno films, booze in stock in the bar, dildos, uniforms, etc., would be recording the value of Marc's management and the girls' unique skills. Which I think we all agree is a damn far sight larger than 0!
Goodwill can also appear on the balance sheet of a company that has never made a transaction for another business, but I focused on the acquisition-related issues here given we are discussing a transaction.
Anyway that is my understanding of goodwill. Happy to be corrected if I have messed this up (although I have worked as a management consultant for 8 years and an investment banker for 2 – hopefully by now I know what the hell I am talking about).
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Bangkok Women : Meet Sensual Bangkok Women
Posted on: 2:37 am on Mar. 2, 2003
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oneeye
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By the way, the reason goodwill may not enter into the considerations of the purchase of Eden are because I doubt whoever buys it really needs to be concerned with balance sheets and official reporting. I hope the business is not being valued on assets + goodwill - this is far too simplistic and as well how the hell do you value incredible sex?
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Thai Girls : Meet Sexy Thai Girls
Posted on: 2:40 am on Mar. 2, 2003
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BoomARang
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Oneeye - Re: Goodwill, very informative, thank you!!!
"as well how the hell do you value incredible sex?"
Simple, rob five banks and pay everything you've get. ;)
Oaktoad - "you would like me to explain this on a site devoted to sex?"
Well, if people are asking questions and having discussions about the selling of a business on this site, why get on my case for asking questions? But, now thanks to Oneeye, I don't have to stand up to use my computer to search Google. 
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Bangkok Girls : Meet Sexy Bangkok Girls
Posted on: 2:51 am on Mar. 2, 2003
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sinirl
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Goodwill, evaluations etc who really cares ?
If Marc makes a few dollars and the bar is still there with the same service (hopefully with Marc still running it) thats fine by me.
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Thai Women : Meet Matured Thai Women
Posted on: 3:42 am on Mar. 2, 2003
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bkkexpat
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edenpapa,
In case the business is sold, what about the VIP members who still have credits on their cards?
bkkexpat
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Bangkok Women : Meet Beautiful Thai Girls
Posted on: 3:52 am on Mar. 2, 2003
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BoomARang
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"If Marc makes a few dollars,,,,"
Shit, I hope he makes a ton of dollars! He deserves it just for putting up with us! ;)
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 4:01 am on Mar. 2, 2003
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sinirl
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Marc
I'm stuck in Saudi at the moment and will be in BKK on the 14th for 2 days so don't do anything until the 16th I will be in need of some attention !
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Thai Girls : Meet Active Thai Girls
Posted on: 4:09 am on Mar. 2, 2003
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edenpapa
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Quote: from bkkexpat on 4:52 pm on Mar. 2, 2003
edenpapa,
In case the business is sold, what about the VIP members who still have credits on their cards?
hi bkkexpat and all
the deal with the VIP will be respected
you have my word
see you
marc
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Thai Women : Meet Matured Thai Women
Posted on: 4:40 am on Mar. 2, 2003
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oldhand
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Goodwill, guys you and the hundreds of others
who have visited the club, plus all the posts replies
on this and other forums all go towards the goodwill,
however IMO the biggest component of goodwill
in this case is Marc I cannot believe there are
many people who could put up with all the shit
and hassel that goes with SUCCESFULLY running
this type of grey business.
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 5:02 am on Mar. 2, 2003
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