Fairness Opinion

Case Study „Fairness Opinion“

Situation

  • Strategic decision by management to sell an international company division
  • Financial investor offering a purchase price for a combined asset and share deal
  • Mandate for evaluation of the financial appropriateness of the offer on behalf of the client’s management and supervisory board (in the event of sale, the client should not be put in a position worse than the one in which she would be if she had not have implemented the transaction)

Solution

  • Concentration and preparation of information on the target company division
  • Preparation of information request lists for relevant issues
  • Check on available documents in terms of completeness, logic, and consistency
  • Plausibility check on the integrated business plan provided by the management board; consideration of documented measures for the realisation of so-called artificial synergy effects
  • Plan based valuation of the company division on the valuation date by means of net present value methods
  • Enhanced valuation by means of market value oriented methods on the basis of so-called trading and transaction multiples
  • Documentation of competing offers for the transaction object
  • Direct comparison of purchase price with observable reference prices (competing offers) and indirect price comparison by means of net present value and market value oriented methods

Result

  • Confirmation of the appropriateness of the transaction value
  • Approval of the sale of the company division to the offered price by management and supervisory board

About the client

  • Listed company in the wood processing industry with revenues of  > €1.0bn and > 5.000 employees at > 20 national and international sites