Fairness opinion

Fairness opinion

A fairness opinion is a professional evaluation by an investment bank or other third party as to whether the terms of a merger, acquisition, buyback, spin-off, or going private are fair. It is rendered for a fee. [ [http://www.investorwords.com/1879/fairness_opinion.html "Definition, Fairness Opinion", "Investorwords.com".] ] [ [http://www.inc.com/articles/2001/02/22138.html Ralph Ward, "A Briefing On Fairness Opinions", "Inc.com" (February 2001).] ]

Controversy

Controversy in financial and management circles surrounds the question of the objectivity of fairness opinions, as one aspect of the duty of care in the fairness of a transaction. A potential exists for a conflict of interest when an entity rendering an opinion may benefit from the transaction either directly or indirectly [ [http://www.cfo.com/article.cfm/5465857 Marie Leone, "Fairness Opinion Neutrality Questioned", "CFO.com" (February 2, 2006).] ] . Directors and officers of the companies also may have an interest in the outcome of the proposed transaction. In response, the Financial Industry Regulatory Authority (formerly the National Association of Securities Dealers) issued its Rule 2290 to require disclosure by its members to minimize abuses [ [http://www.cahill.com/news/memoranda/0000057 Cahill Gordon & Reindel, "FINRA Rule 2290: Required Disclosures in Fairness Opinions" (November 6, 2007)] ] ; this was approved by the Securities and Exchange Commission [ [http://www.finra.org/web/groups/rules_regs/documents/notice_to_members/p037445.pdf "Fairness Opinions: SEC Approves New NASD Rule 2290 Regarding Fairness Opinions", FINRA Regulatory Notice 07-54. Effective Date: December 8, 2007.] ] .

Equity and fairness

Stockholder lawsuits are in the courts [ [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=881109 Steven M. Davidoff, "Fairness Opinions", "American University Law Review," v. 55, p. 1557.] ] . The Delaware Court of Chancery has required sufficient disclosures to “provide a balanced, truthful account of all matters” ["Malone v. Brincat," 722 A.2d 5, 12 (Del. 1998)] and said “When a document ventures into certain subjects, it must do so in a manner that is materially complete and unbiased by the omission of material facts.” ["In re Pure Resources, Inc. S’holders Litig.," 808 A.2d 421 (Del. Ch. 2002), pp. 447-8.] In a Memorandum Opinion in the CheckFree/Fiserv merger Chancellor Chandler underlined that the earlier "In re Pure Resources" Court had established the proper frame of analysis for disclosure of financial data: “ [S] tockholders are entitled to a fair summary of the substantive work performed by the investment bankers upon whose advice the recommendations of their board as to how to vote on a merger or tender rely.” [ [http://courts.delaware.gov/opinions/(0mbwu1yseqke13vour2vljjc)/download.aspx?ID=98980 "In re CheckFree Corp. S’holders Litig.," C.A. No. 3193-CC (Del. Ch. Oct. 18, 2007), Memorandum Opinion, Consolidated Civil Action No. 3193-CC (November 1, 2007).] ] First empirical evidence of fairness opinions in Europe indicates their relevance for shareholders [ [http://ssrn.com/abstract=1071722 Sebastian Lobe, and Nils-Christian Schenk "Fairness Opinions and Capital Markets: Evidence from Germany, Switzerland and Austria", 2008] ] .

References


Wikimedia Foundation. 2010.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • Fairness Opinion — Fairness Opinions sind Stellungnahmen eines unabhängigen Gutachters zur Vorteilhaftigkeit eines Unternehmens(ver)kaufs (Mergers Acquisitions) aus Sicht der Aktionäre. Inhaltsverzeichnis 1 Bestandteile 2 Anwendung und Publizität 3 Ziele und Inhalt …   Deutsch Wikipedia

  • Fairness opinion — Fairness Opinions sind Stellungnahmen eines unabhängigen Gutachters zur Vorteilhaftigkeit eines Unternehmens(ver)kaufs (Mergers Acquisitions) aus Sicht der Aktionäre. Inhaltsverzeichnis 1 Bestandteile 2 Anwendung und Publizität 3 Ziele und Inhalt …   Deutsch Wikipedia

  • fairness opinion — USA An opinion of a company s financial advisor (or investment banker), usually in the form of a letter to the board of directors that a sale or change of control transaction is fair to the company and its stockholders from a financial point of… …   Law dictionary

  • Fairness Opinion — A report evaluating the facts of a merger or acquisition. Fairness opinions are compiled by qualified analysts or advisors, usually of an investment bank, for key decision makers. The report examines the fairness of the offered acquisition price …   Investment dictionary

  • fairness opinion — nuomonė dėl kainos teisingumo statusas T sritis turto vertinimas apibrėžtis Nuomonė, ar už verslo subjekto pardavimą ar perdavimą gauta kaina yra teisinga akcijų turėtojų atžvilgiu. atitikmenys: angl. fairness opinion ryšiai: susijęs terminas –… …   Lithuanian dictionary (lietuvių žodynas)

  • fairness opinion — An investment banker s professional opinion as to the price an acquiring firm s is offering in a takeover or merger. Bloomberg Financial Dictionary …   Financial and business terms

  • Fairness and Accuracy in Reporting — Fairness Accuracy In Reporting (FAIR) is a progressive media criticism organization based in New York City, founded in 1986. FAIR describes itself on its website as the national media watch group and defines its mission as working to invigorate… …   Wikipedia

  • Fairness Doctrine — The Fairness Doctrine was a policy of the U.S. Federal Communications Commission (FCC) that required the holders of broadcast licenses both to present controversial issues of public importance and to do so in a manner that was (in the FCC s view) …   Wikipedia

  • Fairness of the Russian presidential election, 2008 — The fairness of the 2008 Russian presidential election is disputed, with election monitoring groups giving conflicting reports. Most official reports accept that not all candidates had equal media coverage and that some election monitoring groups …   Wikipedia

  • opinion letter — Letter issued by a certified public accountant to accompany financial statements. The opinion letter has two parts. One describes the scope of the accountant s work in the preparation and testing, if any, related to the preparation of the… …   Financial and business terms

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”