Bloated Goodwill Number....? One thing that almost always happens when a company is a serial acqurirer of other companies is that their Goodwill number get so high that it can mask a bad Balance Sheet.
According to TLRY's press release dated January 9, 2024 announcing its Q2 2024 financial results, Goodwill ($2.01B USD) represents almost half (46%) of Total Assets ($4.33B USD).
For those who aren't familiar with Goodwill, here it is in a nutshell:
When a company buys another business, anything it pays above and beyond the net value of the target company's identifiable assets is added to "Goodwill" on the Balance Sheet. In other words, this excess amount of the purchase price is supposed to represent non-quantifiable assets like customer loyalty, brand reputation, etc. that a company is also considered to be acquiring when it buys the business. Once it's added to the acquiring company's Goodwill total, it cannot exist independently and thus can't it be sold, purchased, or transferred separately to another company. However, it can experience future writedowns if it's concluded that the number is overstated.
Goodwill is not to be confused with "Intangible Assets", another asset listed on TLRY's Balance Sheet which you'll notice is a separate Balance Sheet item. Though Intangible Assets are also non-physical, they are distinctly indentifiable. Examples include copyrights, patents, licensing agreements, etc. Unlike Goodwill, it is possible to estimate their value and thus they can be sold by themselves to another business.
Personally, I'm not a fan of a company with a Goodwill number north of 25% of Total Assets as I suspect the probability of the number being overstated is quite high in such instances.