Notes:

• Definition: A written opinion from an independent investment bank or financial advisor stating that an acquisition price is fair to the selling company’s shareholders from a financial point of view.
• Role in Governance: While fairness opinions are not legal opinions, they are critical tools for the Special Committee to show the court and shareholders that they conducted a diligent, arms-length process.
• Limitations:
  • They are forward-looking (based on projections), not backward-looking.
  • They are based on the information provided by the Board; they do not independently verify the data.
  • A “fair opinion” does not guarantee the deal will succeed or be the best strategic move for the company’s long-term future.
• Use by the Special Committee: The Special Committee typically hires an independent financial advisor to issue a fairness opinion. This is a key piece of evidence for the Board to demonstrate they acted in the best interests of shareholders.
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