What is a fairness opinion?

A fairness opinion is a professional assessment that evaluates the financial terms of a transaction to determine whether they are fair from a financial perspective. This assessment is typically conducted by a qualified financial advisor or investment bank and provides crucial insights to boards of directors or shareholders, especially in situations involving mergers, acquisitions, or other significant financial transactions. The goal is to ensure that the price being paid or received reflects a reasonable value based on the available financial data and market conditions.

The professional nature of a fairness opinion distinguishes it from subjective opinions, legal documents, or marketing materials. It relies on objective analyses and quantitative measurements, making it a key element in the decision-making process for stakeholders involved in the transaction. By providing this unbiased evaluation, a fairness opinion can enhance the credibility of the transaction and help prevent conflicts of interest, especially when transactions are scrutinized by shareholders or regulatory bodies.