The fairness opinion is a detailed report that represents an in-depth analysis of the price, terms and conditions of the offer in a purchase-sale transaction and provides a financial opinion about the reasonableness of the transaction for the selling party. Among the most common types of transactions are the sale of shares, sale of a division (“carve-out”), merger and divestment of business lines, among others.
It is recommended for cases where the selling party (“target”) receives an offer of purchase and before making any decision, the price, terms and conditions of the offer are evaluated before being referred to the Board of Directors for consideration and approval. Although they are not required by law, they are appropriate because they reduce the risk associated with a possible transaction and contribute to the correct decision making.
The most common cases where it is recommended to hire a fairness opinion includes, but is not limited to:
- Several offers have been received with different prices, terms and conditions proposed by the buyer
- The buying party is an “insider” or belongs to an affiliate
- The purchase offer is either hostile or has not been requested
- There is discrepancy in criteria among shareholders
Contact us to advise you about the benefits of a fairness opinion for your company.