Previously called “comfort letters,” fairness opinions are vital for a company, particularly in transactions where these opinions will be disclosed to shareholders. Without these, a board’s risk of corporate malfeasance lawsuits is greatly increased.
The process for selecting a valuation firm, the manner in which an opinion is prepared, and how the opinion is presented to a board of directors can make a significant difference in how well the transaction will stand up to legal challenge. There is a significant amount of know-how to be considered in this area, which can mean the difference between being protected or not. BVC’s fairness opinions are credible, authoritative, well-documented, and designed to offset and minimize the risk of legal challenge.
A fairness opinion simply states that a proposed transaction is fair from a financial point of view.
It is designed to objectively show that there are numbers and logic behind a board’s decision and they were acting in good faith in executing a transaction. Fairness opinions are provided to boards of directors for the following specific transaction types:
Mergers and acquisitions
BVC goes through a precise series of steps to ensure that its fairness opinion will stand up to the most intense scrutiny from regulators or shareholders, these steps include:
Valuation of the company, including specific valuation of equity classes or debt securities
Valuation of the consideration if other than cash
Assessment of the fairness of the proposed transaction price from a financial point of view by comparing the indicated range of fair value to our analysis of the transaction price
Involvement and role undertaken by the board
Structure of the transaction
Likelihood of transaction closing (e.g., regulatory and financing considerations)
Thorough analysis/assessment of the offer and the opportunity to improve terms
Form of the consideration
Our procedures are well-documented and consistent with current practices within the profession and current regulations.
All fairness opinions include reviews by an independent committee of senior-level BVC experts.