Solvency Opinions

Duff & Phelps Opinions practice is a globally recognized leader in solvency opinions. Since 2005, we have rendered more than 2,585 fairness and solvency opinions for transactions with an aggregate deal value of over $8 trillion.
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Ranked no. 1 for U.S., EMEA and Global Fairness Opinions

A solvency analysis and opinion helps companies and their boards of directors steer clear of fraudulent transfers and illegal dividends or distributions.

State laws impose certain duties on boards of directors with respect to dividends, distributions and other transfers.

Dividends must be paid from surplus, and cannot leave the company insolvent or with insufficient capital.

A solvency opinion makes determinations as to whether, after giving effect to a transaction: 

  • The company’s assets exceed its debts; 
  • The company should be able to pay its debts as they come due; 
  • The company is not left with unreasonably small assets or capital; and 
  • There is sufficient surplus to effect a distribution.

These determinations arise from fraudulent transfer statutes and dividend prerequisites in state laws. Solvency analysis also provides a board and company management with valuable insight as to the equity and cash flow cushion with respect to its ongoing business.

Duff & Phelps Opinions practice is a globally recognized leader in solvency opinions. Since 2005, we have rendered more than 2,376 fairness and solvency opinions for transactions with an aggregate deal value of over $7 trillion.

Solvency Advisory Services

A solvency analysis and opinion can enhance the company’s or board’s analysis of any leveraged transaction or contemplated distribution. The types of applicable transactions include:

  • Spin-offs and split-offs
    • Corporate spin-off transactions are often done to release shareholder value and achieve other business purposes
  • Dividend recapitalizations
    • Solvency opinions from independent financial advisors are often written into credit agreements as a condition of closing
  • Leveraged buyouts
  • Debt refinancings
  • Intercompany restructurings
  • Large stock buybacks

Frequently Asked Questions

  • 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/liabilities, cash or stock dividend, or a leveraged transaction. 
  • Solvency opinions are designed to assist boards of directors in determining the legality of a proposed dividend or distribution, and/or to assist potential secured creditors in highly leveraged transactions. 
 

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Kroll’s Duff & Phelps Opinions Practice: 2023 Global Leader in Fairness Opinions Worldwide, Including the U.S., EMEA and Australia

Kroll’s Duff & Phelps Opinions Practice: 2023 Global Leader in Fairness Opinions Worldwide, Including the U.S., EMEA and Australia

Kroll, the leading independent provider of global risk and financial advisory solutions, today announced that it ranked No. 1 for the total number of fairness opinions in the U.S., EMEA (Europe, Middle East, and Africa), Australia and globally in 2023, as reported by LSEG (formerly known as Refinitiv).

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