While fairness opinions are routinely commissioned for high-profile mergers and acquisitions, they are often necessary in many seemingly “everyday” corporate circumstances. Both public and private companies need fairness opinions in order to dissolve, refinance or restructure their operations and assets and for other purposes, such as ESOPs.
Generally, directors and management should consider obtaining an opinion from an independent advisor whenever:
- There is a fiduciary responsibility to a significant or diverse class of minority shareholders that may question a particular transaction and its alternatives
- A business transaction or decision could be perceived as a “conflict of interest”
- A security is issued that could be perceived to unfairly benefit or impair one or another class of securities
- There are alternative transactions with different prices or structures
- A company’s prior poor performance raises questions about the timing and pricing of a particular transaction
- A transaction is hostile or unsolicited
- A transaction involves charitable assets
- A board or executive team wants to provide a high degree of transaction “diligence”
- There is question about the value of securities “exchanged” in a transaction (such as a stock-for-stock merger)
- There is a transaction between related entities
- Only one source (e.g., bid) for a transaction has been solicited, as well as in other circumstances
Transactions that reflect the above characteristics may include stock-for-stock mergers, statutory mergers, sales of significant corporate assets, spin-outs, recapitalizations (including PIPEs), nonprofit conversions, stock repurchase programs, “bridge” loans and financings, roll-ups of assets or equity interests, partnership dissolution, squeeze-out mergers, liquidations, exchange offers, insider transactions, ESOPs and other situations.
The critical steps to delivering a high-quality fairness opinion are the following:
- Conducting exhaustive due diligence on the companies and executives involved, the terms of and circumstances surrounding the transaction, and, if applicable, analysis of financial alternatives or the competitive landscape
- Performing detailed financial analysis
- Utilizing generally accepted valuation methodologies to test the reasonableness of the proposed transaction
- Preparing and presenting a defensible opinion or report
Centri’s professionals have provided fairness opinions involving stock-for-stock mergers, asset sales, public company acquisitions, going-private transactions, nonprofit conversions, issuance of dilutive securities, transactions involving companies with common board members, and other situations.
If you are in need of our fairness opinion/business appraisal valuation services, please contact us using the form below.
About Centri Business Consulting, LLC
Centri Business Consulting provides the highest quality advisory consulting services to its clients by being reliable and responsive to their needs. Centri provides companies with the expertise they need to meet their reporting demands. Centri specializes in financial reporting, internal controls, technical accounting research, valuation, and CFO and HR advisory services for companies of various sizes and industries. From complex technical accounting transactions to monthly financial reporting, our professionals can offer any organization the specialized expertise and multilayered skillsets to ensure the project is completed timely and accurately.
For more information, please contact our team.
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