A fairness opinion is a report prepared by a JSE approved independent expert expressing an opinion on whether a transaction is fair/unfair to shareholders. This report is usually included in a circular issued to shareholders to assist shareholders in deciding whether or not to approve a transaction.

The following transactions are examples of where a fairness opinion would be required:

  • Related party transactions;
  • Where shares, options or convertible securities are issued to a related party at a discount;
  • Where shares are purchased from a related party at a premium; and
  • Delisting from the JSE.

The Merchantec Capital valuations team has been approved as an independent professional expert by the JSE for valuations in all industries including specialised sectors as property, mining and insurance.

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Valuation Services

Company Valuations

The purpose of performing a company valuation is to gain an independent view of the estimated amount for which an asset should exchange on the effective valuation date between a willing buyer and seller in an arm’s length transaction.

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Independent Expert Report

In compliance with the South African Companies Act, 2008, companies are required to obtain an IER to provide shareholders with an opinion as to whether a transaction is fair and/or reasonable.

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Purchase Price Allocation Valuation

The PPAV process is one whereby the fair value of all significant business intangible assets, including goodwill, and liabilities of an acquired enterprise must be determined in accordance with IFRS 3: Business Combinations.

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Option Valuations

Option valuation estimates the value of unique financial instruments, including share-based payments, employee incentive schemes and general share options.

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Intangible Asset & Goodwill Testing Valuation

Our team values an entity’s non-physical assets which generate a measurable economic benefit to the owner, such as customer relationships and brand. Additionally, we provide goodwill testing valuations which is an annual requirement of IFRS 36: Impairment of Assets.

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Fund Valuations

Independent valuation of underlying investments in funds and investment holding companies.

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