A fairness opinion is a document prepared by an experienced investment banker or business valuation specialist, which states whether or not a transaction is fair from a financial point of view. The fairness opinion speaks to the fairness of the financial terms of a transaction, as of a specific date. The opinion only speaks to the fairness from a financial prospective and is not intended to establish the fairness from a legal standpoint. Fairness Opinions represent the judgment of an independent and experienced professional, utilizing recognized principles of valuation, about the fairness of the financial terms of a transaction.
Common Reasons for Fairness Opinions
- Support the board of directors and management in fulfilling their obligations to provide information to shareholders
- Prevent conflicts of interest in company transactions, investments and restructurings between related parties
- Documentation and evidence in legal disputes
- Limit the risk of an excessive over payment for a transaction, or acceptance of a price that is too low