A Fairness Opinion is an independent, written professional opinion that the financial terms of a proposed transaction are fair, from a financial point of view, to a specified party.
Definition
A Fairness Opinion is a written, signed professional opinion provided by an independent advisor — typically to a board of directors or supervisory board — stating whether, in their opinion, the financial terms of a proposed transaction are fair, from a financial point of view, to a specified party (commonly the company or its shareholders).
What It Says
The opinion addresses one specific question: are the financial terms fair? It does not say the deal is the best possible deal. It does not say the deal should be done. It does not say the price is the highest achievable. It says the terms fall within a defensible range of fairness given the relevant valuation methodologies.
The defensible range is what matters. A Fairness Opinion is a triangulation across DCF, trading multiples, transaction multiples, and (where relevant) precedent precedents — not a point estimate.
When Boards Commission One
Three primary triggers. First: a related-party transaction or sponsor-led deal where independent confirmation of fairness protects the board against minority shareholder challenge. Second: a complex valuation where multiple methodologies must be reconciled and the board needs an independent reading. Third: documentation requirements — public-company transactions in many jurisdictions are functionally hard to consummate without one.
The economics: a fairness opinion costs a fraction of the transaction value but provides a documentable, independent record of board diligence. In contested situations it is often the difference between defensible and litigated.