Fairness, Solvency and
Surplus Opinions

Financial transactions can carry risk, small or large.  Engage a firm with the experience to provide an independent financial opinion which you can rely upon and that stand up to rigorous scrutiny.

Fairness, Solvency and Surplus Opinions

Over the more than 25 years since the inception of CVA, we have performed more than 200 fairness, solvency and surplus opinions. These opinions have been prepared for transactions ranging from a few million dollars to multi-billion dollar transactions.

The idea that the Board of Directors of a given company owes a fiduciary duty to the shareholders of that company is a concept which is well known, well embedded in case precedent and consistently reaffirmed by the courts.  While board constituency is generally comprised of skilled, educated individuals, those individuals are not experts on all matters which may come before the board.  When confronted with an issue which involves consideration of matters beyond their scope of expertise, prudent boards invoke the assistance of experts.

We are repeatedly called upon by corporate boards to answer the question of value as it pertains to such matters as the fairness of a price offered by a potential suitor for the entire company or the price offered for a minority, but yet sizeable, stake in the company, the financial solvency of the company after giving effect to a stock redemption or the payment of a dividend or whether the company even has sufficient surplus under relevant state law to make the redemption or dividend payment.

All of the foregoing business transactions have the determination of value as their starting point.  In order for the directors to sustain a good faith defense on matters of value, they must first demonstrate good faith in their determination of value.  For this reason, corporate boards continue to call upon CVA as our track record attests to our status as experts on value.

Potential reasons for requesting a financial opinion

  • Provide the Board of Directors an additional layer of protection by having a third party independently evaluate a transaction.
  • Determine if enough surplus exists to issue a dividend to shareholders.
  • Support minority shareholders positions that they are not being unfairly diluted after a recapitalization.
  • Ease lenders solvency concerns regarding issuance of debt.

Types of opinions

  • Solvency opinions
  • Surplus/Capital adequacy opinions
  • Fairness opinions

Our Worldwide Client Base

Our client base extends well beyond North America to clients in South America, Europe, Asia and Australia. That client base includes major lending institutions, public and private companies, private equity and hedge funds as well as owners of large commercial and industrial properties.

CVA has performed a quarterly business valuation for several years for us and the flexibility regarding timing and review has always been strong point for them. This past year, we engaged in a special project that typically would take 2-3 weeks and at the onset, we thought that the time-frame wouldn’t be a problem. Not only did we have to shorten the request to less than a week, we requested that they also make a presentation to our Board of Directors in that same one week time-frame. Brad and Jim were professional and raised the bar on their flexibility from the beginning to end of the project. I’m sure I didn’t thank them enough.
Michael G., Corporate Controller, Vi-Jon
Corporate Valuation Advisors has provided valuation and purchase price allocation advisory services in connection with numerous acquisitions made by Kainos Capital and its portfolio companies. The CVA team has worked effectively and seamlessly with Kainos, our management teams and all applicable third party advisors to deliver quality and timely service. Their work on our behalf has been first rate in all respects.
Daniel H., Partner, Kainos Capital
Our client, an emerging pharmaceutical company that was contemplating an IPO, needed to have a valuation performed in connection with a corporate restructuring and interim financing. We turned to Corporate Valuation Advisors to get this done in a timely and cost effective manner. The team at CVA provided a sophisticated analysis that allowed the board to fulfill its fiduciary duties, and that helped the transaction to close on schedule.
Michael C., Of Counsel, Pryor Cashman LLP
Corporate Valuation Advisors has provided excellent service to us in valuations for purchase accounting for acquisitions and assessment of goodwill, as well as consultation on other areas. The CVA team is very professional, highly technical and very responsive. They are patient in explaining the complex models and focusing on the key issues. They work very well with our auditors and have made the audit process so much easier! Their response time is amazingly quick and they offer a very good value.
Melissa W., Corporate Controller and Chief Accounting Officer, Columbus McKinnon

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