Fairness Opinion (IDW S8)
A fairness opinion is the opinion of an independent expert relating to a decision-making process, especially to the appropriateness of a transaction value in the context of entrepreneurial initiatives.
Members of the management board and general managers are obliged to thoroughly consider at their discretion entrepreneurial decisions and their economic consequences and to produce adequate documentation for the members of the supervisory board and the shareholders.
These obligations are increasingly important for the determination of transaction values in the context of large deals or in restructuring situations. Additionally, it is often not possible for members of the supervisory board or shareholders to evaluate the financial appropriateness of a transaction value, due to a lack of information.
The following benefits are associated with a fairness opinion:
- Assurance for a company body’s decision-making through evaluation by an independent third party expert
- Important contribution to the reliable documentation of compliance with due diligence
- Reduction of information asymmetries at the level of supervisory board members and shareholders