What is it?
Goodwill is value you cannot see, unlike equipment or a building: regulars, location, name and reputation. BDC (the Business Development Bank of Canada) describes it as an intangible asset that arises when a company buys another business for more than the value of its identifiable assets.
The International Valuation Glossary published with the CBV Institute (Canada’s business valuation professionals) says it can arise from factors such as name, reputation, customer loyalty, location and products.
Is it the same as Korea’s “key money”?
It is similar but not the same. In Korea key money is a separate payment by custom, but when a business is sold in Canada, goodwill is settled inside the sale price of the business. The contract shows how the price is split between the business, equipment, inventory and goodwill.
What to watch out for
- Goodwill is worth something only if the business profit will continue. A short lease or an owner who leaves can shrink it.
- Tax and accounting treatment can differ, so check with an accountant and a lawyer.
- Even when a high price is justified by goodwill, check the seller’s profit figures against documents.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
Goodwill is an intangible asset that occurs when a company buys another business for more than the value of its identifiable assets, reflecting the extra value from things like reputation and customer relationships.In plain wordsGoodwill is an intangible asset that arises when a company pays more for a business than its identifiable assets are worth, reflecting extra value such as reputation and customer relationships.
Source: bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary/good-will · checked Nov 2, 2026
Goodwill — an Intangible Asset which represents any future economic benefit arising from a business or a group of assets which is not individually identified or separately recognized. Goodwill can arise as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.In plain wordsGoodwill is an intangible asset that stands for the future economic benefit of a business that is not individually identified or separately recognized. It can come from name, reputation, customer loyalty, location, products and similar factors.
Source: cbvinstitute.com/wp-content/uploads/2021/11/International-Valuation-Glossary-Business-Valuation_EN.pdf · checked Nov 2, 2026
Common questions
Do I pay for goodwill separately when I buy a restaurant or shop?
There is no separate system. It is included in the sale price of the business. Make the contract clear about how the price is split between the business, equipment and inventory, and check the tax treatment with an accountant.
How is goodwill valued?
Usually the whole business value is estimated by multiplying the business profit (for example seller’s discretionary earnings) by a multiple, and the visible assets are taken out of that. There is no fixed multiple, and it changes with timing and the condition of the business.
Guides that use this term
Sources checked
- BDC, Business glossary: Goodwill · checked Nov 2, 2026
- CBV Institute, International Valuation Glossary · checked Nov 2, 2026