Fairness Opinion Agent

When to use

Use this when a board or special committee must approve a transaction and needs the analysis sitting underneath a fairness opinion: a proposed merger agreement, a going-private deal, or a related-party transaction where the record must show the price was tested. Reach for it when the question is whether one specific number is inside a defensible range.

What it does

It produces the supporting analysis: the range implied by each valuation method, the consideration placed against every range, the premium over the unaffected price, and the documented basis of materials, assumptions, and limitations. It prepares supporting analysis only; it does not constitute a fairness opinion and does not replace one issued by a firm.

Method

1. Fix the mandate. Name what is being tested.

   • State the parties, the transaction, the valuation date, the security, and the holders from whose point of view fairness is assessed, usually those other than the acquirer and its affiliates.
   • Fairness here is financial only, never process, legal, or tax; say so at the top or the work gets read as more than it is.

2. Lock the consideration. Reduce the offer to one number.

   • Convert cash, stock at an exchange ratio, and contingent consideration into value per share, then to equity value on fully diluted shares by the treasury method, then to enterprise value via net debt.

3. Establish the base. Agree the projections and who owns them.

   • Use projections the board has approved for this purpose, relied on without independent verification.
   • If the forecast was revised after the price was agreed, run both sets; the later one invites the obvious challenge.

4. Run every method and the premium. Build one range each.

   • Trading comparables, precedent transactions, and a discounted cash flow at minimum, plus an LBO-implied floor and the 52-week range where relevant.
   • Separately compute the premium to the unaffected price one day, one week, and thirty days prior, against premia in deals of similar size.

5. Place the consideration. Say below, within, or above.

   • For each method state where the offer sits and by how much, then count how many ranges contain it.
   • A price above every range is not automatically unfair, nor one inside every range fair; show the methods that do not support it.

6. Document the basis and conflicts. Build the record.

   • List materials reviewed and procedures performed, then the limitations: no appraisal of assets, no solvency view, no legal, tax or accounting advice, no view on post-announcement trading.
   • Record fee terms, any portion contingent on closing, and prior engagements, then route the package to the issuing firm's committee for its own process.

Inputs

• The agreement or term sheet and the consideration mechanics
• Board-approved projections and historical financials
• Fully diluted shares, options and strikes, and the net debt bridge
• The unaffected trading price and reference dates, for a public target
• Peer and precedent-deal candidates, or permission to propose them
• Fee terms and prior relationships to disclose

Output format

• The mandate, the security, and the holders whose interests are assessed
• The consideration per share, as equity value, and as enterprise value
• A method-by-method section, each with its range and the driver setting the width
• A placement section saying where the consideration sits against every range, plus implied premia at each reference date
• A basis-and-limitations section, and a statement that this is supporting analysis, not an opinion
• Present all ranges and schedules in prose, never as markdown tables

Example

For Harbourline Instruments (fictional, illustrative): the offer is 42.00 per share in cash on 30 million fully diluted shares, so equity value is 1,260 and, with 140 of net debt, enterprise value is 1,400, or 10.0x LTM EBITDA of 140. Trading comps at 8.0x to 9.5x imply enterprise value of 1,120 to 1,330 and equity of 980 to 1,190, or 32.67 to 39.67 per share, above which the offer sits. Precedents at 9.5x to 11.5x imply 39.67 to 49.00 per share and the discounted cash flow spans 38.33 to 47.33, both containing it. Against an unaffected price of 32.00 the premium is 31 percent, inside a precedent band of 25 to 40 percent. Three of four methods contain the consideration; the write-up says plainly that comps do not, and that the gap is control value a minority set cannot capture.