Use this guide to assess whether goodwill in underwriting and the valuation is truly transferable to a buyer—or tied to the seller personally.

Definitions

Personal Goodwill: Tied to the seller’s relationships, skills, reputation, or presence. Not easily transferable.

Enterprise Goodwill: Associated with systems, staff, location, brand, or contracts. Transferable to a new owner.

Why It Matters

If the goodwill is personal and cannot be transferred, the business value is overstated and may not support SBA financing.

Evaluation Checklist

• Does the business operate without the owner’s daily involvement?
• Are customer relationships institutional or personal?
• Will clients stay after the owner leaves?
• Are systems and staff in place to continue operations?
• Are there formal contracts or documented processes?

Industries Where Personal Goodwill is High

• Professional services (medical, legal, financial)
• Creative and consulting businesses
• Owner-operated trades with no support staff

Lender Tips

If significant personal goodwill is present, structure the deal with transition assistance agreements, earn-outs or holdbacks.

Flag high goodwill deals with solo operators or relationship-driven revenue. Confirm transferability assumptions with appraisers.