Fairness Opinion

Fairness Opinion: A financial advisor’s assessment of whether a transaction price is fair to the client’s shareholders. This opinion is formed through detailed financial analysis, comparing the target’s value to the purchase price, evaluating the transaction’s economic fairness. Boards, special committees, and other fiduciaries seek fairness opinions to understand the financial dimensions of a transaction and to show they have exercised due diligence.

Why Fairness Opinion Matters?

Fiduciary Duties: Board members must act on an informed basis and in the best interest of the company and shareholders. An independent fairness opinion assists in fulfilling these duties by offering a comprehensive analysis and unbiased opinion of a transaction’s financial fairness.

Benefits of Obtaining a Fairness Opinion:

• Provides an informed basis for decision-making

• Ensures transparency and fairness

• Demonstrates due diligence

As stewards of shareholder capital, board members often make decisions that can significantly impact shareholder value. Obtaining an independent fairness opinion is critical for any business with a broad shareholder base, including both public and private companies.

Best Practice: Obtain a fairness opinion for significant transactions that could affect shareholder value, especially if the deal will receive more scrutiny. Situations include:

• Material transactions

• Related-party transactions

• Transactions involving noncash consideration (e.g., stock, seller financing, earnouts, options)

• Cross-border transactions

• Deals with a target in an early development stage or different industry

• Deals involving significant synergies

• Transactions that could impact a not-for-profit status

Our Fairness Opinion Team offers expert assessments to boards of directors, special committees, and other fiduciaries during mergers, acquisitions, divestitures, and significant transactions. By examining the financial details of these deals, we assist our clients in meeting their fiduciary responsibilities and making well-informed decisions.