Fairness & Solvency Opinions for Real Estate Transactions
Kroll provides independent fairness and solvency opinions for real estate transactions, helping boards and stakeholders meet fiduciary obligations, manage risk and support defensible decision‑making.
Kroll Real Estate Advisory Group assists clients with fairness and solvency opinions for all phases of a real estate transaction. We understand the importance they play in ensuring transparency, objectivity and fiduciary responsibility, especially in high-stakes deals involving significant debt, restructuring or asset transfers.
What is a fairness opinion?
A fairness opinion is a letter delivered to a fiduciary (typically a company’s board of directors) regarding whether a transaction is fair from a financial point of view to the company or a group of the company’s security holders.
A fairness opinion does not indicate that the best possible price has been received or paid, as the case may be. Instead, a fairness opinion indicates that the price is in a range of values (or above or below the range) indicated by the analyses.
Why is it important for real estate transactions?
In real estate transactions, especially mergers, acquisitions and asset transfers, fairness opinions help the board of directors and committees fulfill their fiduciary duties, validate valuation reports prepared by independent valuers, offer assurance to minority shareholders that the deal is equitable, demonstrate due diligence and reduce litigation risk.
What is a solvency opinion?
A solvency opinion is a collection of determinations on the valuation, capitalization and cash flow-generating ability of an entity immediately before and immediately following a transfer of assets and/or liabilities, dividend, stock buyback or leveraged transaction.
Solvency opinions are designed to assist boards of directors in determining the legality of a proposed distribution or stock buyback.
Why is it important for real estate transactions?
During a real estate transaction, solvency opinions help mitigate fraudulent conveyance risk, especially in debt-heavy transactions; protect the board of directors and stakeholders from post-transaction litigation; offer reassurance to lenders and investors about the financial health of the entity post-deal; and support compliance with regulatory and fiduciary obligations.
Learn more about our Opinions practice and how our team can help with fairness opinions and solvency opinions.
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