Opinion Services

Opinion Services become necessary when our client are undergoing significant, life-altering change. Company directors and fiduciaries rely upon Fairness Opinions when making decisions that will impact the financial interests of others. A Fairness Opinion assesses adequacy of the proposed pricing in a corporate transaction. Ultimately, it ensures that the price paid is fair.  A Solvency Opinion assesses a company’s ability to remain solvent following assumption of additional debt financing necessitated by an acquisition, merger or other corporate transaction.

Fairness Opinions

Corporate mergers, acquisitions, sales and refinancing are subject to the scrutiny of debt providers, shareholders, regulators and the tax authorities. We provide clients with our independent opinion of whether the price paid in a corporate transation is fair to both parties. When considering a transaction, fairness opinions assist directors in complying with their fiduciary duties to shareholders and protect the directors in the event a transaction is challenged. Our fairness opinions provide boards of directors, shareholders and other stakeholders with assurance to the satisfaction of the court.

Solvency Opinions

Solvency opinions confirm that a company remains solvent after an acquisition, merger or other corporate transaction requiring debt financing. Should bankruptcy occur later, an independent solvency opinion can protect debt providers, boards of directors and advisors from fraudulent conveyance claims. To determine solvency, American Appraisal experts conduct a detailed analysis of the company, the proposed transaction and financial projections. The solvency opinion comprises the results of three tests:

• Balance Sheet Test: The fair value and present fair saleable value of a company's assets exceeds its stated and identified contingent liabilities.
• Cash Flow Test: After the proposed transaction, the company would be able to pay its debts, including identified contingent liabilities, as they mature.
• Reasonable Capital Test: The capital remaining in the company would be a reasonable amount for the business in which it is engaged and proposes to be engaged.

Our Work

American Appraisal provides objective and impartial Opinion Services designed to minimize the risk of all parties involved in the transaction.  American Appraisal is one of the global market leaders in providing Fairness and Solvency Opinions to our clients. American Appraisal consultants, both in the UK and across our network of global offices, have skills across all industries and extensive experience of business valuation and applying business valuation and share valuation techniques including.

• Discounted Cash Flow
• Market Multiples

Within these models we use our extensive databases and experience to select the most appropriate valuation inputs such as:

• discount rate
• long-term growth rate
• sustainable working capital and CapEx requirements
• maintainable earnings
• capitalisation multiple (EBITDA multiple, PE multiple etc)

We have played a key role in both complex and more straightforward valuations of shares allotted as non-cash consideration, including the following recent projects:

American Appraisal consultants are active in:

• the ICAEWs Valuation Special Interest Group
• HMRC’s Shares & Asset Valuation Fiscal Forum
• the International Valuation Standards Council
• the Appraisal Issues Task Force
• the FASB’s Valuation Resources Group
• the Appraisal Foundation
• the American Society of Appraisers
• the American Institute of CPAs

This involvement ensures our knowledge of current valuation standards, practices and procedures. We invite you to take advantage of American Appraisal’s experience. We are happy to talk through your requirements and see where we might be able to help. Please feel free to contact one of our experts.