Goodwill In A Business


Is goodwill applicable when:

1) Selling a business

2) Valuating a business

3) Selling a share of a part of a business

4) Valuing a business for a deceased estate


Goodwill is an intangible asset and it is generally not permissible to buy/sell intangible assets in Shariah. Therefore stipulating a specific amount for goodwill when selling any business or a share of a business is not permissible. However, one could inflate the selling price of a business or a share of the business to an amount that equals or even exceeds the amount that one expects, had he charged goodwill, without stipulating it for goodwill. 

As for considering goodwill when evaluating a business, fundamentally it would be permissible if that’s the price that the business will fetch when it is sold integrating the goodwill in the business as explained above. However, when selling the business, the above detail will still apply.

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.


Fataawa Mahmudiyya 16; 178

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