An article in the financial press in early 20X9 discussed the implications of the increasing number of goodwill impairments in the U.S. in 20X8.

If goodwill assets are impaired, they are written down to their fair value and the impairment amount is charged to the income statement.

1. The article referenced some well-publicized cases involving recognition of goodwill assets in which certain U.S.-based companies acquired their rivals at a very high premium, resulting in very large recorded goodwill amounts, but incurred impairment charges soon after acquisition.

With respect to these acquisitions, the article stated that managers competence was brought into question. The article suggested that significantly overpaying for a rival company amounted to managerial ineptitude.

If the above statement is correct, describe the effect on managers reservation utility of overpaying for rival firms.