Abstract

http://ssrn.com/abstract=1789014
 
 

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Fairness Opinions in Mergers and Acquisitions


Steven Davidoff Solomon


University of California, Berkeley - School of Law

Anil K. Makhija


Ohio State University (OSU) - Department of Finance

Rajesh P. Narayanan


Louisiana State University

April 8, 2011

THE ART OF CAPITAL RESTRUCTURING: CREATING SHAREHOLDER VALUE THROUGH MERGERS AND ACQUISITIONS, H. Kent Baker, Halil Kiymaz, eds., Wiley, 2011

Abstract:     
When evaluating a merger or acquisition proposal, boards frequently seek fairness opinions from their financial advisors. This fairness opinion ratifies the consideration being paid or received as "fair from a financial point of view" to shareholders. This chapter (Chapter 26 in "The Art of Capital Restructuring: Creating Shareholder Value through Mergers and Acquisitions", Baker and Kiymaz (eds.),Wiley 2011) describes how a Delaware Supreme Court ruling and Delaware corporate law combined to institutionalize fairness opinions and how the form and content of a fairness opinion results from concerns over limiting the liability associated with delivering the opinion. It then surveys the limited finance literature that examines whether fairness opinions provide value to shareholders or serve the interests of the board and management at the expense of shareholders. It also highlights the difficulties associated with conducting such empirical tests because of the way fairness opinions are sought and provided. It concludes with some conjectures about the potential value of fairness opinions, and raises questions for future research.

Number of Pages in PDF File: 12

Keywords: Fairness Opinions, Mergers and Acquisitions, Investment Banking

JEL Classification: G24, G34

working papers series


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Date posted: March 21, 2011 ; Last revised: April 17, 2011

Suggested Citation

Davidoff Solomon, Steven and Makhija, Anil K. and Narayanan, Rajesh P., Fairness Opinions in Mergers and Acquisitions (April 8, 2011). THE ART OF CAPITAL RESTRUCTURING: CREATING SHAREHOLDER VALUE THROUGH MERGERS AND ACQUISITIONS, H. Kent Baker, Halil Kiymaz, eds., Wiley, 2011 . Available at SSRN: http://ssrn.com/abstract=1789014 or http://dx.doi.org/10.2139/ssrn.1789014

Contact Information

Steven M. Solomon
University of California, Berkeley - School of Law ( email )
215 Boalt Hall
Berkeley, CA 94720-7200
United States
Anil K. Makhija
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-1899 (Phone)

Rajesh P. Narayanan (Contact Author)
Louisiana State University ( email )
Baton Rouge, LA 70803-6308
United States
225-578-6236 (Phone)
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