Fairness Opinion from a Merchant Banker is required by SEBI on Valuation reports of Valuer which are made for determination of share swap (exchange) ratio under a scheme of merger/arrangement, pursuant to orders of the Court/NCLT.
In case of M&A, focus is on Comparative Valuation of Companies and thus apart from adhering to the general valuation principles, the Valuation needs to be fair from the point of view of Shareholders of the Transferor and Transferee Companies. In accordance with SEBI Circular no CFD/DIL3/CIR/2017/21 dated 10th March, 2017 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the listed as well as the Unlisted Company getting merged shall each be required to obtain a “Fairness Opinion” on the Valuation of assets / Equity shares done by the Valuers from an independent Merchant Banker.
Essentially in case of Fairness Opinions the Merchant Banker has to ensure that the Public shareholders are not affected due to this valuation. As Market Price for Listed Companies which are frequently traded is considered fair price, real challenge lies in value assessment for Transferor Companies which are Unlisted Companies. It need to be verified that valuer has applied valuation methods on relative basis and the valuation is not biased in favour of shareholders of Transferor companies.
As per SEBI norms, only a SEBI Registered Merchant Banker can issue a Fairness Opinion
Real challenge in Fairness Opinion is to ensure that the valuation is fair and reasonable for the public shareholders of the Listed companies.
We as a SEBI registered merchant banker validate the Valuation Report & provide Fairness Opinion Advise on the same for Valuation done by Valuer. By virtue of our strong Regulatory practice in SEBI and M&A, Corporate Professionals has the experience and insight necessary to provide practical and timely Fairness Opinion Consultancy Services. We come in a league of one of the best Independent Fairness Opinion Consultant, Fairness Opinion Advisor in Delhi, India. having performed one of the largest number of fairness opinions.