Need of Fairness Opinion Valuation for Business Growth

Need of Fairness Opinion Valuation for Business Growth

February 23, 2022 Admin
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In the world of finance, Fairness Opinion Valuation is a determining factor to conclude whether the proposed stock price is justified to the target company. Let’s understand its advantages and other attributes in this article. 


For any corporate management, it is a responsibility towards their shareholders that a fairness opinion report is prepared to showcase that the management is working in their best interest. And to make a valid and genuine report, it is prepared by independent advisors hired by the company to confirm that the terms are fair. This is essential for the satisfaction of the shareholders, otherwise, there can be a section of shareholders, who may have doubts which any corporate management should avoid. 


What is Fairness Opinion Valuation?

Fairness Opinion Valuation report in India is essentially a professional opinion consolidated with the inclusion of collected data and market expertise of an independent analyst. The report provides suggestions to the parties involved in a merger/ acquisition or takeover, etc.


A fairness opinion valuation report is prepared by the qualified analysts, usually of an investment bank, and these reports are paid. The independent analysts hired examine the specifications of the deal with precision, which includes any possibility of business association that might benefit the seller.


Attributes of Fairness Opinion Valuation

Fairness opinion valuation reports are not always required for public companies in all transactions, but these reports can reduce risk involved with major financial actions, which includes litigation risk. It can also be a good way to facilitate communication between multiple parties that are involved.


Many Fairness Opinion Valuation services in Gurgaon and other parts of nation offer their services that are highly in demand and valuable especially for the transaction, which may be subjected to hostile takeover. It is essential if there are multiple offers for a company with wide range of prices, also when the board members or shareholders want to be assured about the transparency of the transaction.

Need of Fairness Opinion Valuation for Business Growth

Need of Fairness Opinion Valuation

To justify the trust that the shareholders have in the management of the company, Fairness Opinion Valuation report is a must. Here’s the list of advantages of obtaining a Fairness Opinion Valuation:-


  • Minimizes the risks of disagreement among shareholders
  • Board of directors must demonstrate their positive intentions to the shareholders
  • Validation from a qualified independent advisor affirms fair valuation of price
  • Good idea in case of a possible hostile takeover


Fairness Opinion Valuation must be obtained in the following situations:

A fairness opinion from a qualified financial advisor reduces the possibility of disagreement among shareholders about a deal/ project. Note down the following scenarios when Fairness Opinion Valuation should be done:-


  • If different competing bids are received in terms of price or structure, leading to the final conclusion of which offer is the best to choose.
  • If the parties involved in the transaction are either insiders or other affiliated parties.
  • If the company has experienced poor financial performance.
  • If the offer is unsolicited.
  • If the management faces an internal disagreement about the adequacy of the offer.
  • If the board of directors expect additional information on the investment attributes of the acquiring company.
  • If only a single bid for the company has been received, while the other competing bids did not materialize.


All the above points justify the significance of Fairness Opinion Valuation Services in India for both small and large companies. The conditioning might differ for each one but the requirement to have a Fairness Opinion from an external source that too from a financial expert justifies the deal or project that is dependent on this Fairness Opinion Valuation Report. It explains a lot about the financial health and capacity of the company to build on.

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