FFG Valuations has considerable experience in assisting management of publicly held companies in assessing the value of an investment banking transaction from an independent perspective. These transactions typically require us to issue Fairness or Solvency opinions. To provide maximum protection, fairness opinions must be completely independent and free of conflicts of interest.
The purpose of a Fairness Opinion is to advise a fiduciary on the value of a company that is involved in a transaction, typically the sale of an asset or the entire company. For example, a financial advisor might provide a board of directors with a fairness opinion on the value of a company that is being sold. Others examples of fiduciaries include: Employee Stock Ownership Plan (ESOP) trustees, corporate debt trustees, bankruptcy trustees, and personal trustees.
Typical Fairness Opinion transactions include mergers & acquisitions, leveraged buyouts, joint ventures, going private transactions, corporate reorganizations, corporate divestitures, and financial restructuring.
State laws impose restrictions, and in some cases, certain duties on boards of directors, with respect to dividends, distributions and other transfers. Dividends must be paid from surplus, and cannot leave the company insolvent or with insufficient capital. Solvency opinions provide a level of reassurance to stakeholders in a leveraged transaction as to whether or not an entity is solvent, either before or after a transaction. Most solvency opinions for leveraged transactions are performed on the buyer’s side. Lenders, financial advisors, attorneys, boards of directors and shareholders who are considering a leveraged transaction, or a contemplated distribution of assets, must rely on an independent, experienced firm to provide an objective solvency opinion.
Typical solvency opinion transactions include dividend recapitalizations, leveraged buyouts, management buyouts, restructuring, going private, and share buybacks.