An opinion by a company's financial advisor, most often an investment bank, to the company's board of directors in connection with a transaction that would have a material effect on stockholder value or present a potential conflict of interest. The opinion, which is usually written in the form of a letter, generally concludes that a specific transaction's terms are fair to the company's stockholders from a financial standpoint.

While not legally required, the receipt of a fairness opinion can give the board additional comfort that it has satisfied its fiduciary duties in recommending approval of the transaction.

A fairness opinion typically includes:

For more information on fairness opinions, including when a fairness opinion is needed, what the opinion includes and key issues for counsel when reviewing the opinion and drafting the related SEC disclosure, see Practice Note, Fairness Opinions.