With a reputation built over decades, Duff & Phelps Opinions practice delivers high quality financial advice and fairness opinions that withstand the most rigorous scrutiny. Refinitiv ranks our opinions practice No. 1 for global fairness opinions for 2022.Contact Us
- Sell-side/buy-side mergers & acquisitions
- Spin-offs, split-ups, divestitures
- Going-private transactions
- Related-party transactions
- Down-round financing, minority investments, and other financing transactions
- Requirements pursuant to certain bond indentures and credit agreements
- Any transaction requiring a shareholder vote
- ESOP/ERISA transactions
Frequently Asked Questions
What is a fairness opinion?
- A fairness opinion is a letter delivered to a fiduciary (typically a company’s board of directors) as to whether or not a transaction is fair, from a financial point of view, to the company or a group of the company's security holders
- Does not indicate that highest/lowest or best price has been received/paid, as the case may be; instead a fairness opinion indicates that the price is in a range of fair values, or above or below the range, as the case may be
While not legally required, when are fairness opinions typically requested?
- Virtually any publicly-traded company going private, merging, or engaging in a material or related-party transaction
- Private companies also get fairness opinions for related-party transactions, when there is potential for litigation, or if there is a large and diverse group of shareholders
What are the typical transactions where a fairness opinion may be needed?
- Recapitalizations and restructurings
- Stock repurchase transactions
- Corporate acquisitions and divestitures
- Mergers (sell-side and buy-side)
- Leveraged buyouts
- Going private transactions
- Squeeze outs
- ESOP/ERISA transactions
- High vote shareholders receiving greater consideration
- Insiders receiving different consideration
What is the purpose of a fairness opinion?
- Assists a board of directors in a decision-making process, supporting their duty to act on an informed basis
- Demonstrates the board of directors acted prudently
- Provides a line of defense in the event of post-deal litigation
What is the difference between a fairness opinion and a valuation?
- A fairness opinion will state that the economic terms of a transaction (i.e., price) is fair, from a financial point of view, to a particular stakeholder (i.e., the company or shareholders).
- A valuation will merely determine a valuation range based on certain commonly accepted valuation methodologies, with no conclusion regarding fairness to a particular stakeholder.
- Important to understand is how a valuation analysis is to be utilized by the engaging party.
- Meaning, if the engaging party is utilizing the valuation to support a decision making process in transaction where consideration is being exchanged, it is analogous to a fairness opinion.
- The situation above is very different from a valuation being utilized for tax, accounting or other corporate purposes.
- Most fairness opinions are supported by a fundamental valuation analysis, although in certain circumstances where fundamental valuation may not be applicable, a bespoke comparable transaction analysis may be the only methodology utilized.
When is a fairness opinion typically delivered?
- A fairness opinion is typically issued in conjunction with a board of directors’ (or other fidcuiary’s) approval of the transaction.
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