Company boards are increasingly seeking independent, third-party fairness opinions on M&A transactions as they become more cautious in the current, highly scrutinized regulatory environment. Among those to have taken the plunge is power giant Duke Energy, which hired Lazard to provide a fairness opinion on its $9 billion acquisition of Cinergy. UBS was Duke's financial adviser. "With the push toward improved corporate governance, we feel you'll see more companies following the same path." said Randy Wheeless, a Duke Energy spokesman.
Lazard also gave a fairness opinion to SunGard in connection with its $11.3 billion purchase by a consortium of private equity groups. Credit Suisse First Boston was the financial adviser to SunGard and also provided the company with its own fairness opinion. "We believe that an increasing number of boards, both public and private, will seek independent financial advice," said Albert Garner, managing director in the M&A practice at Lazard.
Traditionally, a fairness opinion--an assessment of monetary consideration in an M&A transaction--was done by the financial adviser itself. But, now questions are being raised about the legitimacy of advice rendered by a firm that has a financial stake in the success of a deal and company boards are seeking out other firms for advice.
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