In today’s business world, clarity and transparency are essential to making sure the transactions conducted by companies and others are fair and equitable. To help with this, many companies and individuals are turning to what are known as fairness opinion firms. Although the opinions they provide are not considered to be legal, tax, accounting, or regulatory advice, they do play a very important role in helping committees, boards of directors, and other groups make key decisions about various financial and legal matters. Now that you want to learn more about these firms and whether or not you require such services, here are some things to keep in mind.
What Is a Fairness Opinion?
A fairness opinion is a letter which summarizes the analysis of a transaction. The letter summarizes the analysis made by a third-party or investment bank, specifically focusing on whether certain financial elements of the transaction, such as its price, are fair and reasonable. Not required by law, a fairness opinion can be used by a board of directors to show the board did uphold its fiduciary duty of care to shareholders.
Who Uses Fairness Opinions?
Various companies rely on fairness opinion firms such as Marshall & Stevens to provide these opinions as they pertain to certain financial transactions. Most often, such opinions are issued for transactions involving the sale or purchase of publicly-traded companies. However, they are also used for such transactions as bankruptcies, management buyouts, employee stock ownership plans, and liquidations or restructurings.
Why Is a Fairness Opinion Important?
While you already have some ideas as to why fairness opinions are important, you should remember the two primary reasons. First, a fairness opinion firm will provide an analysis of a financial transaction that is considered to be objective, allowing a board to clearly measure the elements of the transaction. Second, a fairness opinion can help protect a board from potential litigation, since using a fairness opinion will demonstrate the board exercised its fiduciary duty of care.
Why You Need a Fairness Opinion Firm
A fairness opinion firm is composed of experts who have testified as expert witnesses in court cases, advised corporate boards and independent trustees on financial transactions, and who stay well-informed on the latest court decisions involving corporate financial transactions.
Rather than find you and your board of directors in legal trouble regarding a financial transaction, rely on the analysis of a fairness opinion firm you know and trust. By doing so, you can have access to information that has been thoroughly analyzed and is objective in every way possible.