Goodwill is a politely mendacious courtesy which accountancy pays to the financial markets. Such amiable fictions populate financial economics in which the function of financial markets, to facilitate sale and purchase of financial assets, is ennobled by an ability to determine the true value of those assets. Because the prices in financial assets rarely express the true value of anything, a dignified name that confirms the correctness of the market's judgement must be given to the deviation of market value from the assets represented by that market value. Goodwill is one such dignified expression.

Goodwill is the value placed on the expectation that the clients or customers of an established company will continue to patronise it out of habit or confidence in the conduct of its business. In practice, it is today simply the amount by which the price of a going concern exceeds the sum of fair values of all of its other net assets. In other words, it is the amount of money that may be paid to the owners of a business over and above the costs of merely buying the assets that the company use. When financial markets are inflated, the scope for goodwill is correspondingly expanded.

The origin of the term lies in changes in accounting practice that accompanied the rise of the capital market in the second half of the nineteenth century.