Investment Banking: Fairness Opinions
Recently, FINRA enacted Rule 5150 in an attempt to address conflict of interest concerns by requiring increased disclosure of conflicts, and by setting standards for how investment banks manage their internal approval process for rendering fairness opinions. For example, investment banks now must disclose whether change-in-control payments to corporate executives and directors were taken into account in the fairness determination. In addition, in many cases, clients will hire an independent firm to render a fairness opinion, rather than rely solely on the opinion of the M&A advisor. As a FINRA-regulated broker dealer, Newbury Piret & Co. adheres to Rule 5150 regulations when preparing and issuing fairness opinions.
Click to read NPC’s Perspective on Fairness Opinions.
Over the 25 years that Newbury Piret has provided fairness opinions in connection with major corporate decisions, their usefulness has expanded from the boardrooms of publicly-held corporations to include closely-held companies, venture backed firms and small reporting companies.
Fairness opinions are widely accepted as an important element of the overall process that Boards of Directors follow in considering corporate transactions. These opinions have drawn substantial scrutiny over recent years for reasons related to the perceived self-interest of executives in change-of-control transactions, and the perceived conflict of interest when a financial advisor leading a merger or sale assignment also issues the fairness opinion on a deal.
Our clients are the boards and special committees of companies undertaking major decisions affecting corporate value. In addition to merger and acquisition transactions, those board-level decisions include going private transactions, financings, and spin-offs. With senior bankers and advisors drawing upon decades of transaction and valuation experience, Newbury Piret offers sophisticated and timely services to our middle-market clients.
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