When you purchase another company, the difference between its market value (if publicly traded) and the acquisition price is booked as an asset called "goodwill."

If it's clear you've overpaid for the asset, you have to "write down" the goodwill (take the lost value as a loss). One example: http://www.businessinsider.com/hps-8-billion-write-off-is-re...

If it weren't for goodwill, no one would acquire anyone else b/c they would take an immediate earnings hit.