Fairness Opinion
A Fairness Opinion is an independent fairness assessment issued by a valuation expert, attesting that the price of a transaction (acquisition, divestment, merger, recapitalisation) is financially fair to shareholders — or to a specific class of them — as of the transaction date.
First and foremost a governance tool, it protects the board of directors from any subsequent challenge: documented evidence of due diligence, legal protection of the M&A process and market comfort for minority shareholders, and probative evidence in case of litigation.
What is a Fairness Opinion?
The Fairness Opinion is an independent report produced by a valuation expert, formally concluding that the financial terms of a transaction are — or are not — financially fair to a given class of shareholders as of the transaction date.
It is not intended to set an optimal price nor advise on negotiation strategy: it is an a posteriori analysis of the negotiated price, based on at least four recognised valuation methods — the practitioners' method (Swiss standard, ESTV circular 28), DCF, comparable-transaction multiples, listed-company multiples — supplemented, depending on sector and mandate, by adjusted net asset value, the real options approach or specific sector methods, and benchmarked against market conditions as of the day.
First and foremost a governance tool, the Fairness Opinion safeguards the board's duty of care: in France (AMF recommendation DOC-2020-03 for public buyout offers), in Switzerland (Swiss Code of Best Practice for Corporate Governance, article 706 of the Swiss Code of Obligations on equal treatment of shareholders) and in international practice, inherited from the landmark Smith v. Van Gorkom ruling (Delaware Supreme Court, 1985).
Hectelion is not FINMA-licensed. Our scope strictly covers fairness opinions for non-listed companies (MBO/LBO/OBO, intragroup mergers, family transfers, related-party transactions). Fairness opinions on listed transactions (takeover bids, squeeze-outs under LIMF) fall within the exclusive scope of AMF-licensed experts in France or COPA/FINMA-recognised experts in Switzerland, outside our scope of intervention.
Step 1
Rationale and independence declaration
Formalise the engagement letter, document independence (no conflict of interest, no success-based fees) and define the class of shareholders covered by the opinion.
Step 2
Transaction architecture analysis
Analyse the legal and financial architecture of the transaction, the strategic rationale, timing, conditions precedent and financing structure.
Step 3
Multi-method valuation of the company
Apply at least four recognised approaches — practitioners' method (Swiss standard, ESTV circular 28), DCF, listed-company multiples, comparable-transaction multiples — supplemented by NAV/adjusted net asset value and, depending on sector and mandate, specific methods, to establish a robust value range.
Step 4
Comparison with the negotiated price
Position the price within the value range, calculate the implicit premium or discount and assess consistency with sector comparables as of the transaction date.
Step 5
Robustness tests and sensitivities
Stress-test the result against key assumptions (WACC, perpetuity growth, normative margins, synergies) and document alternative scenarios.
Step 6
Delivery of the signed Fairness report
Deliver a complete report documenting methods, assumptions and sources, alongside the signed formal opinion — defensible before auditors and in case of subsequent litigation. Hectelion is not FINMA-licensed and its fairness opinions are not intended for listed transactions subject to the COPA.
Why and when to commission a Fairness Opinion?
A Fairness Opinion is required — or strongly recommended — whenever the board of directors faces a decision likely to materially affect shareholders: control transaction, related-party transaction, share buyout between associates or qualified conflict of interest within the board.
Majority sale (sell-side)
Securing the board's decision to divest control of the company, demonstrating the fairness of the price obtained for shareholders and documenting board due diligence.
Strategic acquisition
Providing the board of directors with an independent opinion on the fairness of the price paid for the target, securing the value creation analysis and documenting the investment decision.
Share buyout between associates
Documenting the fairness of the price of a share buyout between associates of a non-listed company — negotiated exit of a shareholder, exercise of a statutory pre-emption clause or restructuring of shareholding — to protect the stakeholders and the board of directors.
Related-party transaction
Documenting the financial fairness of a transaction between shareholders, subsidiaries or executives — securing compliance with article 706 of the Swiss Code of Obligations and French governance rules.
Recapitalisation or MBO
Attesting the fairness of the entry price of new investors or management in a recapitalisation, MBO or secondary LBO transaction.
Board conflict of interest
Issuing an independent opinion when one or more directors are in a qualified conflict-of-interest situation — legal protection for the board and minority shareholders.
Our Fairness Opinion methodology
A structured six-step approach, aligned with international standards (IVS, ASA Business Valuation Standards, AMF DOC-2020-03 recommendations), producing an opinion defensible before the board, shareholders and the courts.
- Framing and independence declaration
We formalise the engagement letter, document our independence (no conflict of interest, no fees contingent on the success of the operation) and precisely delimit the class of shareholders covered by the fairness opinion. - Transaction and context analysis
We analyse the legal and financial architecture of the transaction, the strategic rationale, timing, conditions precedent, price adjustment mechanisms and financing structure. - Multi-method valuation of the target
We systematically apply at least four valuation approaches: the practitioners' method (Swiss standard recognised by the ESTV via circular 28, weighting earnings value and substance value), Discounted Cash Flow (DCF) with sensitivity analyses, listed comparable-company multiples and comparable-transaction multiples. Additional methods may be added depending on sector and mandate: adjusted net asset value (NAV), real options approach or specific sector methods. - Comparison with the negotiated price
We position the negotiated price within the value range produced by each method, calculate the implicit premium or discount and assess its consistency with sector comparables as of the transaction date. - Robustness tests and sensitivity analyses
We stress-test the result against key assumptions (WACC, perpetuity growth rate, normative margins, synergies) and document alternative scenarios to demonstrate the solidity of the final opinion. - Delivery of the signed Fairness report
We deliver a complete report documenting all methods, assumptions, market data sources and reasoning, alongside the signed formal opinion — defensible before auditors and in case of subsequent litigation. Hectelion is not FINMA-licensed and its fairness opinions are not intended for listed transactions subject to the COPA (Swiss Takeover Board) — which fall within the exclusive scope of recognised independent experts.
Diverse range of clients advised
SMES
Executives/Management
Family shareholders
Family businesses
Family Offices
Private equity funds
operations analyzed
years of expertise
clients advised
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The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.
Frequently Asked Questions
A Fairness Opinion is an independent report produced by a valuation expert, formally concluding that the financial terms of a transaction are — or are not — financially fair to a given class of shareholders as of the transaction date. It is an a posteriori analysis of the negotiated price, not strategic advice.
A Fairness Opinion is commissioned by the board of directors (or its independent special committee) whenever a material transaction is submitted for approval: change-of-control sale, major acquisition, buyout of minority shareholders, related-party transaction or qualified conflict of interest. It protects the directors' duty of care.
A business valuation determines an intrinsic value range, independent of any transaction. The Fairness Opinion comes once the price has been negotiated: it compares this price to valuation methods and concludes on its financial fairness. The Fairness Opinion therefore includes a valuation but adds a formal signed opinion, legally defensible.
The cost depends on the complexity of the transaction, the sector and the depth of analyses required. For a Franco-Swiss mid-market transaction (CHF 10M to CHF 500M of transaction value), expect between CHF 30,000 and CHF 100,000 — always on a fixed-fee basis, never contingent on the success of the operation, which safeguards our independence.
A standard Hectelion Fairness Opinion engagement takes between 3 and 6 weeks depending on transaction complexity, the number of valuation methods to apply and data quality. In case of urgency (rapid signing), an accelerated report can be delivered in 2 weeks.
The issuer of a Fairness Opinion bears professional responsibility for the methodology applied and the conclusions reached. The report exhaustively documents methods, assumptions, sources and reasoning — designed to withstand examination by an auditor or a court.
Yes, a Fairness Opinion can be challenged by minority shareholders (notably in a minority buyout or a related-party transaction). The Smith v. Van Gorkom case (Delaware Supreme Court, 1985) remains the international benchmark: a robust, documented and independent opinion is the best safeguard against any challenge to the board.
A Fairness Opinion mobilises several methods: the practitioners' method (Swiss standard, ESTV circular 28, weighting earnings value and substance value), Discounted Cash Flow (DCF) with sensitivity analyses on WACC and perpetuity growth, listed comparable-company multiples (EV/EBITDA, EV/Sales, P/E), recent comparable-transaction multiples, and depending on sector, adjusted net asset value (NAV) or real options. The convergence of these approaches establishes a robust range.
Any material modification to the terms (price, structure, parties, conditions precedent) requires an update to the Fairness Opinion. An opinion delivered on a CHF 100M price does not cover a transaction revised to CHF 110M or under different conditions. The update is faster and less costly than an initial engagement.
Our independence rests on three pillars: (1) fixed fees, never contingent on the success of the operation; (2) absence of any commercial or financial relationship with the buyer, seller or their advisors; (3) formal independence declaration appended to the report. We systematically decline any assignment presenting a conflict of interest, even apparent.