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Impairment in a Deal? Don’t Let it Tank Portfolio Value

Sikich

May 1 2025

2 min read

Market volatility may drive strategic opportunity, but it also presents significant financial reporting challenges. Macroeconomic factors such as interest rate fluctuations, geopolitical instability, and broader economic uncertainty can materially impact even well-managed businesses. In such an environment, previously recorded asset values—particularly goodwill—are likely to change.

Under U.S. GAAP, impairment assessments are not optional; companies are required to assess for impairment when a triggering event occurs. These events, whether internal, like operational underperformance, or external, like broad market shifts—serve as indicators that an asset’s carrying value may no longer be recoverable. Prompt evaluation following such events is essential.

Failure to perform an impairment analysis in a timely manner may result in misstated financials, unanticipated impacts to earnings, and complications during audits. Additionally, a delayed or incomplete impairment review can raise significant concerns among stakeholders. In such scenarios, intentions to “circle back later” won’t hold up under an audit.

Diagnostic questions to ask to determine whether you (or your portfolio companies, for our private equity friends) need to evaluate asset impairment:

Have recent economic events triggered emergency, unscheduled board of directors or leadership meetings?

Have auditors recently asked to review or discuss impairment?

Are your impairment models built on assumptions that may not be accurate any longer?

If you answered yes to any of the above, are uncertain, or even hesitated, it may be time for a deeper look.

Here’s where we come in.

Sikich helps companies work through impairment analyses. We work directly with leadership teams and their accounting functions to support an efficient completion of this evaluation. We offer best practices and produce audit-ready memos and supporting calculations. At Sikich, we support companies in navigating impairment analyses with clarity and precision. Our team works directly with finance and accounting functions to:

⦁ Evaluate goodwill, long-lived assets, and intangibles

⦁ Identify and document triggering events

⦁ Model potential impairments and prepare audit-ready support

⦁ Offer technical best practices tailored to your business or industry

Whether it’s for your own company or a portfolio company in need of support, we’re here to help you meet today’s reporting demands with confidence and compliance.

Let’s ensure you stay ahead of impairment—not one step behind. Contact us today.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Sikich

Sikich is a global company specializing in technology-enabled professional services. With more than 1,900 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and is comprised of one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals. *Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor. 