Fairness Opinion Helps Complete The Transaction

May 2013       Download PDF      Print


The Greater St. Louis Community Foundation (GSLCF) received three gifts of closely-held business interests in 2011. In 2012, the donors of the three gifts desired to purchase back their previously gifted interests, creating liquidity for GSLCF and the donor advised funds which held the interests. Upon request to repurchase the previously gifted interests, the donors provided an updated appraisal to GSLCF showing a 30%+ decline in value from the date of the original gift. GSLCF disagreed with the donors' appraisal and obtained their own appraisal, which showed a value not much different than the original gift value. Through a series of negotiations the donors suggested a repurchase price between the two appraisals; however, the GSLCF Board of Directors did not know whether this price was fair.


GSLCF, through its general counsel, retained Allied Business Group to provide a fairness opinion, from a financial point of view, regarding the repurchase price of the transaction. Allied Business Group was not retained to provide another independent opinion of value, but rather to assess whether the proposed transaction price was fair, from a financial point of view, to the holders of the gifted interests at GSLCF. As part of the engagement, we performed in-depth business, industry, economic, financial, and valuation analysis on the closely-held interests and their primary underlying assets. We conducted various sensitivity analyses and reviewed ranges of probable transaction values to compare to the proposed purchase price.


Allied Business Group prepared a fairness opinion letter, which provided our opinion as to the fairness, from a financial point of view, of the consideration to be received by the holders of the interests in the proposed transaction, as well as a supplemental fairness opinion report, which outlined the various analyses conducted which led to our ultimate opinion. Allied Business Group's fairness opinion provided confidence to the Board of Directors in making their decision of whether or not to proceed with the proposed transaction.