Introduction
Following relatively lower levels of M&A activity in 2024 and into 2025 (with the onset of tariff uncertainty), the outlook for the remainder of 2025 is set to improve based on many factors, including stabilizing interest rates, emerging tariff clarity and the financial markets’ willingness to look past a likely one-time transitory bump in inflation. Also, due to the decrease in M&A transactions, private equity funds have historically high levels of uninvested capital which is further supported by a robust private debt market. However, there is a subset of pre- and post-COVID-19-era transactions where many companies assumed post-COVID-19 demand levels were the “new normal” and, as a result, paid high multiples for companies and capitalized those companies with aggressive debt levels. As capital structures mature, there is a need for these investments to be “cleaned up,” especially in situations where companies require liquidity to fund existing operations. Some of the more strategic approaches that companies use to address their cash shortfall include distressed capital raises, debt and equity restructurings, and asset sales. However, these deal mechanisms can be complex and dilutive to a certain class of existing shareholders. For these capital events to be recognized as fair from a financial point of view, it is often prudent for existing stakeholders to obtain an independent fairness opinion.
1. Distressed Capital Raises
There are a variety of capital raise options in a distressed situation, but the most common transaction is “down-round” financing. A down-round financing occurs when a company sells shares of common or preferred stock at a valuation that is less than the price it sold shares for in an earlier financing.
Many down-round financings are linked to identifiable negative events like a short-term liquidity crunch, market downturn, missed strategic milestone(s), or a company’s overall financial underperformance. The funding could also be related to an M&A opportunity or asset purchase, but, due to recent negative events, access to traditional financing is limited. With down-round financings, there are often times when early investors who do not participate in the new money are diluted. In these situations, third-party fairness opinions are regularly used to mitigate such risks.
3. Asset Sales1
When a company is facing financial challenges, a common strategic alternative is to sell a division or other assets to generate liquidity. Even if the transaction is executed at arm's length, boards are often advised to seek a fairness opinion to support the valuation of the division or assets being sold, especially when the sale is to a related party.
Conclusion
In distressed capital raises or asset sales, fairness opinions are often used to mitigate risks. A fairness analysis assesses the price and terms of the proposed transaction and determines if these factors are considered fair to the relevant stakeholders. This third-party assessment effectively provides an objective perspective to protect the decision makers, including management, sponsors, and board members, and supports that they have exercised their fiduciary duty of care when approving these complex transactions.
Recent Fairness Opinion

[1] This does not cover transactions related to §363 sales but may apply to fraudulent conveyance related valuations under §548 of the Bankruptcy Code.
Ankura's Valuation Services practice is experienced in rendering fairness opinions and providing a full range of valuation and transaction advisory services. If the Valuation Services team can be of assistance, please reach out to either Richard Hitt (312) 953-7197 or Karl D'Cunha (312) 479-7991.
Securities and Fairness Opinions Offered Through Ankura Capital Advisors, LLC (Member FINRA/SIPC).
© Copyright 2025. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.