Service

TRANSACTION ADVISORY

Fairness Opinions

We provide Boards of Directors, investors, trustees, and other organizational leaders or fiduciaries with advisory services to assist in fulfilling their fiduciary duties. We provide fairness opinion services in conjunction with mergers & acquisitions and other services. We provide the highest standards of integrity, independence, objectivity, and financial expertise.

A variety of factors in transactions involving both public and private companies can trigger the necessity for a fairness opinion, including:

Sale of Subsidiary Businesses, or Distinct Lines of Business.
Recapitalizations.
Stock Repurchase Programs.
Squeeze-out Transactions.
Spinoffs, Spinouts, or Split-ups.
Certain ESOP Related Transactions.
Other Significant Corporate Events

The courts are showing an increasing propensity to scrutinize fairness opinions. We can play a role in assisting companies to resolve regulatory issues.

Solvency Opinions

A Solvency Opinion is a specific opinion that is based on an analysis that helps provide confirmation that a borrower would remain solvent according to certain criteria following an acquisition, merger or other corporate restructuring completed with debt financing.

A solvency opinion is a portion of the overall due diligence to be completed by both transferor and transferee. It is designed to demonstrate the reasonableness of the assumptions used and to build an evidentiary case, in advance of any legal challenge, that the company was in fact solvent at the time of the transaction, and that the transaction did not cause the insolvency of the company or leave it with insufficient working capital to execute on its intended business plan.

Analysis

A solvency analysis is both a logical and financially prudent means of achieving the proper level of assurance with leveraged transactions. Generally, Solvency is the ability to meet debt obligations as they come due.

Insolvency is an inability to service debt obligations. The formal definition for insolvency according to the U.S. Bankruptcy Code 11 U.S.C Section 101 (32):

Insolvency is a financial condition such that the sum of [the] entity’s debt is greater than all of the [the] entity’s property, at a fair valuation.
Fair value, in the context of a going concern, is determined by the fair market price of the debtor’s assets that could be obtained if sold in a prudent manner within a reasonable period of time to pay the debtor’s debts.

Solvency Tests

Solvency opinions are rendered by independent financial advisors according to a three-step process, which closely examines the fair market value of a company’s assets, cash flows, and capital requirements such that:

The fair market value and present saleable value of a company’s assets exceed the stated and identified contingent liabilities. Post transaction, the company would be able to pay its debt and contingent liabilities, as they mature; and the remaining capital of the company is a reasonable amount for the business in which it is engaged.
In a highly leveraged transaction, the absence of the proper liquidity, cash flow, and capital analysis can ultimately result in financial distress and bankruptcy for acquiring companies. Solvency opinions confirm that an investor should expect that an acquiring company would remain solvent according to the criteria listed above after an acquisition, merger, or other corporate restructuring that was consummated with debt financing.

Industries We Serve

Media & Entertainment

Oil & Gas

Hedge Funds

Power & Utilities

Banking & Security

Automotive

Federal Government

Customer Products

Real Estate

Technology

Telecom

Health Care

Aerospace & Defence

Private Equity

Life Sciences

TRANSACTION ADVISORY

Fairness Opinions

Solvency Opinions

Analysis

Solvency Tests

Industries We Serve

Request a Callback

Useful Links

Contact Us