Series 79 practice questionmediumFairness Opinions
A financial advisor provides a fairness opinion stating that the $35 per share offer is 'fair, from a financial point of view' to the target's shareholders. This opinion means:
- AThe $35 price is the maximum value any buyer would pay for the target
- BThe target's shareholders are guaranteed to approve the transaction
- CThe target's board is legally required to accept the offer
- DThe consideration falls within a range that the advisor deems financially fair based on its analysis✓ Correct answer
Explanation
Why D — The consideration falls within a range that the advisor deems financially fair based on its analysis
A fairness opinion addresses whether the consideration is within a range of fairness from a financial perspective; it does not opine that the price is the highest possible price or the best deal available. The opinion is one factor the board considers in exercising its fiduciary duties but does not replace the board's own judgment. It also does not address the legal, tax, or strategic merits of the transaction or guarantee any particular outcome.
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