Fairness Opinions


One of the most difficult decisions that managements and boards of directors face in today's increasingly litigious environment is negotiating any material agreement such that it appropriately reflects fair market value while addressing management's and the board of directors' various fiduciary and other obligations. Whether dealing with a strategic alliance, executive compensation plan, merger or acquisition, equity or debt offering, licensing agreement or other material contract right; meeting the business judgment standard is made more difficult as a consequence of the various factors that need to be thoroughly considered. Herrera Partners has experience addressing (i) the process that resulted in the subject agreement, (ii) expected and current competitive pressures, (iii) impact on current and future profitability, (iv) expected synergies to be realized from the agreement in question, (v) alternate legal forms effecting the agreement in question and/or (vi) the underlying tax and accounting considerations.

Fairness opinions have historically been limited to attesting as to the fairness from a financial standpoint of mergers and acquisitions. However, with the increasing level of vigilance related to enforcing directors and officers insurance policies, a growing number of managements and boards of directors are seeking fairness opinions to affirm strategic alliances, executive compensation plans, mergers and acquisitions, equity or debt offerings, licensing agreements or other material contract rights. Additionally, seeking a second fairness opinion on any merger, acquisition, equity or debt offering, financial restructuring involving a material aspect of the companies operations has become commonplace.

Herrera Partners is most often called upon to issue fairness opinions in complex and time sensitive client matters. Our firm has extensive experience managing client situations where a pronounced risk of litigation or other form of dispute with dissatisfied shareholders, creditors and/or other stakeholders exists. With ever-increasing litigation, regulatory and other risks facing managements and boards of directors, issuing and defending a fairness opinion is more than an academic exercise. We have successfully represented a number of clients in shareholder derivative litigation and other similar types of disputes involving a contested merger, acquisition, equity or debt offering, strategic alliance, executive compensation plan, license, patent or contract right.