There is lack of agreement as to the adequacy of the offer. There is concern that the shareholders fully understand that considerable efforts were expended to assure fairness to all parties. The board desires additional information about the investment characteristics of the acquiring company. Varying offers are made to different classes of shareholders. There is only one bid for the company, and competing bids have not been solicited.
Directors have a fiduciary responsibility to the shareholders known as the business judgment rule .
In general, directors and management are given broad discretion in directing the affairs of a business. Directors are expected to act in good faith based on the care that an ordinary person would take in supervising the affairs of the business. Inherent in this rule is the requirement that the board of directors be informed about the basis for major decisions prior to reaching a conclusion. In essence, there is an expectation that reasonable decisions will be made in a proper way. The fairness opinion is a short document, typically a letter.