The IVSC has today issued draft new guidelines on the provision of fairness opinions.
Many corporate transactions are supported by fairness opinions which aim to provide boards and other stakeholders advice as to whether the terms of a proposed transaction are fair from a financial perspective. A valuation or valuation analysis is often at the core of the opinion. While in some countries there are regulatory requirements governing when opinions are required, who may provide them and what they should contain, these are not consistent and many companies are domiciled in countries with no regulation at all.
The draft Guidelines are the latest step in The IVSC’s project to develop best practice guidelines aimed at promoting convergence and good corporate governance in the international arena.
The project is being led by the IVSC Professional Board. Board member Doug McPhee, who is Head of Europe, Middle East & Africa Valuation Services at KPMG in London explained:
“Because a typical fairness opinion contains more than valuation advice, they have often been seen as falling outside of the International Valuation Standards and the ethical framework that has developed around valuation. These guidelines are designed to bridge that gap and show how the key principles of independence, objectivity and transparency in the IVS can be applied to the provision of fairness opinions.”
The new Guidelines examine potential conflicts that could threaten the objectivity of the provider of a fairness opinion and matters that should be undertaken in developing and reporting the opinion to maximise transparency for investors and others who rely on opinions.
Comments on the draft are invited by the end of May.
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NOTES TO EDITORS
The International Valuation Standards Council (IVSC) is an independent, not-for-profit, private sector organization. As the established international standard setter for valuation, the IVSC develops and maintains standards for the reporting and disclosure of valuations, especially those that will be relied upon by investors and other third party stakeholders in financial statements or other published documents. It also supports the need to develop a framework of guidance on best practice for valuations of the various classes of assets and liabilities and for the consistent delivery of the standards by properly trained professionals around the globe.
The governance structure of the IVSC includes two independent technical Boards – the International Valuation Standards Board and the International Valuation Professional Board – and a global Board of Trustees responsible for the overall strategic direction and funding of the IVSC.
For more information please visit: www.ivsc.org