Boards of directors must, at times, make decisions that are subject to intense external scrutiny. Selling all or part of the company, making a significant acquisition, raising capital or buying out a large shareholder can all lead to questions about the effect of such deals on existing shareholders. Outside scrutiny is elevated when the deal lacks a market-clearing mechanism, or an affiliate is on the other side. An independent fairness analysis and opinion helps boards of directors assess these situations by providing a third-party view of the value of the consideration involved, and ultimately the fairness to existing shareholders.
Private equity sponsors increasingly find themselves on both sides of a deal involving one or more investment funds under their management. Not only in advisor-led secondary transactions, but also in capital infusions and other transactions between funds. In these unavoidable situations, an independent view of the pricing on the deal can provide comfort to limited partners and Limited Partner Advisory Committees that the private equity sponsor has treated the funds fairly.
