Fairness & Solvency Opinion Services

Fairness Opinions
A fairness opinion is the professional opinion of a valuation firm, regarding the fairness of a price offered in a merger or takeover. Any board of director decisions involving major corporate decisions that affect corporate value, e.g. acquisitions, merger, share buybacks, spinoffs, going private, etc., may require an objective fairness opinion.

Because transactions often involve board members who may somehow have a vested interest or be affiliated with the company, a fairness opinion shows evidence that the board member was recusing himself from review of the deal and that the potential deal was properly examined.

For a fairness opinion to provide maximum protection for the board of directors, the valuation firm rendering the fairness opinion must be independent and free of conflicts of interest.

In rendering a fairness opinion, the valuation firm may examine price, terms, legality, and potential conflicts in relation to similar transactions. The valuation firm also conducts basic due diligence and analyzes risks, deal structure, comparable transactions, and other factors when making a determination of whether or not a deal is fair.

The board engaging the valuation firm may also use the engagement as an opportunity to ask questions. For example, if there were any guideline companies left out of the comparative analysis, and why.

Solvency and Capital Adequacy Opinion Services
Similar to fairness opinions, solvency opinions are financial opinions issued near the close of a transaction. The opinions generally address certain financial tests of solvency. The opinion is often required by boards and lenders as additional protection in the case of a subsequent fraudulent conveyance attack.

Please contact Cambridge Partners & Associates for an initial evaluation of your transaction so that we may determine the best selection of a valuation product for your specific requirements.