It Looks Like a Good Deal – But Is It a “Fair Deal”?

The NASD, institutional investors and plaintiffs' lawyers recently have focused an intense spotlight on the practice of issuing fairness opinions. Fairness opinions address the fairness, from a financial point of view, of the consideration being paid in mergers and acquisitions, asset sales, securities buybacks and other transactions. Any board of directors decision regarding a significant corporate transaction is likely to be based, in part, on a fairness opinion. In light of recent concerns over potential conflicts of interest, companies and board of directors involved in significant transactions should give careful thought not only to what a fairness opinion says, but also to who is giving the opinion and the process that was followed in preparing and rendering the opinion.