In part one of this two-part blog series, we went over some simple basics on what are known as fairness opinions in the business brokerage world. Referring to a report that speaks to the overall financial fairness of a proposed transaction, fairness opinions are common in business sale settings -- meaning they're important to know the ins and outs of.
At Utah Business Consultants, we're happy to serve as a top business broker in Salt Lake City and nearby parts of Utah, helping clients with everything from business valuations to the entire process of selling their business. When are fairness opinions used, and why should you consider using one during any business transaction you're taking part in? Here's a rundown.
Here are some of the most common situations in which fairness opinions will be used:
As you can see, fairness opinions can be used in a variety of different business transactions. In each case, the goal is the same -- to ensure that all parties involved are comfortable with the price being paid or received.
If you've never been involved in a business transaction before, you may be wondering why fairness opinions are used. After all, can't the parties just agree on a price and move forward with the deal?
There are a few reasons why fairness opinions are often used in business transactions. For one, you heavily decrease the risks associated with the deal. Remember, a fairness opinion is effectively an insurance policy -- if something goes wrong and it's later revealed that the price wasn't fair, you could potentially backs out of the deal or receive compensation for any losses incurred.
In addition, using a fairness opinion can help to pave the way for a smooth transaction. If all parties involved in the deal are comfortable with the price being paid or received, it's much less likely that there will be any problems or hangups during the process.
Finally, fairness opinions can add a layer of legitimacy to the deal. If you're selling your business, for example, having a fairness opinion can show buyers that you're serious and ready to move forward.
For more on fairness opinions and their use in business sales, or to learn about any of our business brokerage services in SLC or nearby areas, speak to the team at Utah Business Consultants today.