A Fairness Opinion is made from a financial point of view, which review the complete transaction of a company. The review is basically done by a third party or by an investment bank. The fairness opinion is mainly considered in the situation of merger, acquisition, buyback, spin-off or privatization.
Getting a Fairness Opinion is importance for the board of directors to prove that they are acting in best interest of the shareholders and the transaction happening in the company is fair. The board of directors should make an assurance that the opinion is given by a qualified financial authority to avoid any further conflict among the shareholders.
There are no specific guidelines given as to when the company should opt for fairness opinion, however it should be taken into consideration if one or more below given situation is faced by the company:
- When there are a multiple classes of stocks with different rights and payouts.
- If the company have passive or minority shareholders
- If the company is lacking in sufficient number of experienced board members
- If there is an family ownership in the company and if any disputes occurs then fairness opinion should be considered
- If there are multiple bidders when selling the stock or assets of a company
- If the company experiences a poor financial performance
The financial adviser examines all these factors and identifies the potential problems and provides a fair opinion. So getting the fair opinion shows the effect taken by the board of directors to fulfill their fiduciary responsibility.
Get back to us for Fairness Opinion proposal.