In what year did the carrying amount of Goodwill for Corcoran decrease?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
rating or reportable segments. The reorganization resulted in a goodwill impairment of $25 million at the Cartus reporting unit. In addition, as part of the Company's annual impairment assessment, it was identified that franchise trademarks were impaired by $25 million. The annual impairment assessment indicated that impairment charges were not necessary for the Company's other reporting units or other indefinite-lived intangibles. In assessing the potential impact of reducing the estimated fair value by 10% for each of the remaining reporting units and
other indefinite-lived intangible assets, management concluded that, excluding the Company's trademarks, no impairment of goodwill or indefinite-lived intangibles would have been recognized for 2023. For the remaining trademarks that were not impaired, which included trademarks at Title Group and Cartus, the fair value exceeded the carrying value by approximately 3%. The fair value of trademarks is determined using the relief from royalty method which exhibits sensitivity to variations in projected revenues.
During the fourth quarter of 2022, the Company performed its annual impairment assessment of goodwill and other indefinite-lived intangible assets. The decline in transaction volume during 2022 largely due to rapidly rising mortgage rates, high inflation, reduced affordability, and broader macroeconomic concerns resulted in lower homesale transaction volume for the brokerage and franchise business and lower referral volume for the lead generation business. These market conditions as well as an increase in the weighted average cost of capital resulted in the recognition of an impairment of goodwill at the Owned Brokerage Group reporting unit of $280 million, an impairment of goodwill at the Franchise Group segment of $114 million related to the Cartus reporting unit and an impairment of franchise trademarks of $76 million. The results of the Company's annual impairment assessment indicated no other impairment charges were required for the other reporting units or other indefinite-lived intangibles. Management evaluated the effect of lowering the estimated fair value for each of the remaining reporting units and indefinite-lived intangible assets by 10% and determined that no impairment of goodwill or indefinite-lived intangibles would have been recognized under this evaluation for 2022 with the exception of the title trademark.
Source: Item 23 — RECEIPTS (FDD pages 75–276)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, the carrying amount of goodwill decreased in 2023. The document indicates that during the fourth quarter of 2022, Corcoran performed its annual impairment assessment of goodwill and other indefinite-lived intangible assets. Due to factors such as declining transaction volume caused by rising mortgage rates, high inflation, and macroeconomic concerns, the company recognized impairments of goodwill at the Owned Brokerage Group reporting unit of $280 million, at the Franchise Group segment of $114 million related to the Cartus reporting unit, and an impairment of franchise trademarks of $76 million. These impairments were recorded in 2023 following the assessment performed in late 2022.
Specifically, the impairment assessment led to a $280 million reduction in goodwill at the Owned Brokerage Group, a $114 million reduction at the Franchise Group segment related to Cartus, and a $76 million impairment of franchise trademarks. These changes reflect significant financial adjustments based on market conditions and internal performance evaluations. The document also notes that management evaluated the effect of lowering the estimated fair value for each of the remaining reporting units and indefinite-lived intangible assets by 10% and determined that no further impairment of goodwill or indefinite-lived intangibles would have been recognized under this evaluation for 2022, except for the title trademark.
In the fourth quarter of 2023, Corcoran reorganized its internal reporting structure, integrating the lead generation business within franchise services. This reorganization resulted in a goodwill impairment of $25 million at the Cartus reporting unit. Additionally, the annual impairment assessment identified that franchise trademarks were impaired by $25 million. These impairments further contributed to the decrease in the carrying amount of goodwill during that year. The document specifies that these impairment charges were not necessary for the company's other reporting units or other indefinite-lived intangibles.