Pointing fingers lead to fairness opinions – An increasingly popular transactional safeguard

Description

Abstract: In a difficult economy, many parties want to point fingers when projected results fall short, acquisition synergies fail to materialize or insolvency ensues. For this reason, among others, fairness opinions are becoming increasingly popular. Simply put, a fairness opinion addresses whether a transaction appears “fair” from a financial point of view. Fairness opinions aren’t legally mandated, but they can help facilitate major transactions, such as mergers and acquisitions (M&As), spin-offs, stock repurchases, and divestitures. This article looks at what goes into fairness opinions and their different applications, while a sidebar discusses potential conflicts of interest among fairness opinion providers.