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Fairness Opinion

Fairness opinion is a Financial Advisors (Category I Merchant Banker) opinion and an independent objective analysis from a financial point of view as to the fairness of the financial terms of a Business Combination or a Corporate Transaction. There are many reasons for fairness opinions, most of which deal with transactions (business combinations) involving publicly listed and closely-held companies.
An independent opinion of fairness relative to the exchange of values can provide substantial support for such transactions. Furthermore, independent fairness opinions are useful as a defense against dissident shareholder claims.

When Fairness Opinion is required?

  • When a public company undertakes a Merger of Acquisition exercise.
  • When a public company divests one of its divisions.
  • When there is a management buyout or take-private (a PE firm acquires the company via a leveraged buyout and turns it private).
  • When there is a bankruptcy, liquidation and Corporate Restructuring.
  • When there is a hostile takeover – in this case it would be called an “inadequacy opinion” instead and would be used to defend the target by claiming that the offer is not fair.
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