What was the reported value of goodwill associated with the Del Taco acquisition?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Represents the closing indebtedness of Del Taco's existing debt that was paid at the Closing Date by the Company.
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The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities is recorded as goodwill. The goodwill of $319.7 million arising from the acquisition was primarily attributable to the market position and future growth potential of Del Taco for both company-operated and franchised restaurants related to future store openings, expansion into new markets, and expected synergies. None of the goodwill resulting from the acquisition is deductible for tax purposes. The goodwill arising from the Del Taco acquisition was allocated to the Company's reporting units as follows (in thousands):
| Del Taco brand | $ 230,722 |
|---|---|
| Jack in the Box brand | 89,000 |
| Total acquisition date goodwill | $ 319,722 |
Refer to Note 5, Goodwill and Intangible Assets, for further details and for the changes in the carrying amount of goodwill.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the acquisition of Del Taco resulted in a recorded goodwill of $319.7 million. This goodwill is attributed to Del Taco's market position, potential for future growth in both company-operated and franchised restaurants, expansion into new markets, and expected operational synergies.
The FDD specifies that none of this goodwill is tax-deductible. Goodwill represents the excess of the total purchase price over the fair value of tangible and identifiable intangible assets, minus assumed liabilities. It is a common accounting practice to record goodwill in such business acquisitions, reflecting the value of intangible assets that are not separately identifiable.
It's important to note that during the third quarter of 2024, Del Taco identified events that suggested the goodwill allocated to the Del Taco reporting unit might be impaired. Consequently, a quantitative test was performed, which indicated that the fair value of the reporting unit was less than its carrying value, leading to an impairment of goodwill of $162.6 million at that time. This highlights the risk that goodwill can be subject to impairment if the business underperforms or market conditions change.