The audit committee of the board of directors of a $15 billion publicly traded retail company planned to acquire real estate from a related party. Stout was engaged to advise the audit committee on the proposed transaction and issue a fairness opinion regarding the consideration to be paid by the company in connection with the proposed transaction. Related-party transactions are frequently scrutinized as shareholders fear that the related party is benefiting at the expense of the company.
As part of our analysis, we performed an independent valuation analysis of the property, resulting in a range of values for the property to be acquired. We also reviewed the proposed purchase contracts to fully understand the consideration and to identify any other potential liabilities being assumed. The analysis was presented to the audit committee and was used by it in connection with its review of the proposed transaction.
Stout's analyses, due diligence, and presentation provided the audit committee with information that it used in arriving at its decision to approve the company’s purchase of the real estate from a related party.