Project Dunmore — Fairness Opinion
A 2-hour Fairness Opinion / Board Materials case study with a complete model answer
Modeled After
Barclays
Fairness opinion analysis presented to a board: an Approach to Analysis page that states why relative valuation was and was not used, followed by premiums paid, accretion/dilution and DCF, closed by the six canonical disclaimer clauses
Structure and exhibit set are modeled after Barclays. The company, the financials and every figure in this case are entirely our own.
The Situation
Dunmore Specialty Foods, Inc. (NASDAQ: DNMO) makes branded specialty foods across three segments: Sauces & Condiments, which is cooking sauces, dressings and table condiments; Baked Snacks, which is crackers, savory biscuits and snack bars; and Refrigerated Meals, which is chilled entrees, soups and prepared sides.
Dunmore Specialty Foods, Inc.
- Sector
- Branded specialty foods — cooking sauces, dressings and table condiments; crackers, savory biscuits and snack bars; chilled entrees, soups and prepared sides
- Size
- Geography
- United States; headquartered in Springfield, Missouri, selling through national grocery, mass, club and convenience channels, with manufacturing, distribution, procurement and back office shared across all three segments and managed centrally
- Ownership
- Situation
The Prompt
You are the financial advisor to the Board of Dunmore Specialty Foods, Inc. Following a seven-month negotiation, the Board has agreed the principal terms of a merger under which Ledgeworth Brands, Inc.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
Form 10-K extract
PDFUnlockBoard-approved projections — Management Case and Sensitivity Case
PDFUnlockMarket and trading data
PDFUnlockTransaction documents and process record
PDFUnlockBlank modeling template
XLSXUnlockComparable companies, precedent transactions and premiums paid — raw extract
XLSXUnlock
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 120 minutes.
PART 1
Projections — Management Case and Sensitivity Case
PART 2
Discounted Cash Flow — Management Case
PART 3
Discounted Cash Flow — Sensitivity Case
PART 4
Selected Publicly Traded Companies
PART 5
Selected Precedent Transactions
PART 6
Premiums Paid Analysis
PART 7
Illustrative Statistics at Various Prices
PART 8
Valuation Summary — Football Field
PART 9
Approach to Analysis — Methodologies Used and Not Used
PART 10
The Opinion Letter, the Disclaimer and the Board Memorandum
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished answer deck, Excel model and memo are in the solution set below.
- 01
Read the two projection cases before you build anything
- 02
Screen all three sets before computing a single statistic
- 03
Separate what you observed from what you applied
- 04
Charge stock-based compensation once, on both sides
- 05
Look at where the value is coming from before you trust the range
- 06
Build the disclaimer as analysis, not as boilerplate
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Approach to analysis page
The page near the front of a fairness opinion presentation that lists every methodology considered, marks each as used or not used, and gives the reason. It exists because the first question in any challenge to an opinion is not whether the arithmetic is right but why the analysis is the analysis — why these four methodologies and not the two that would have produced a different answer. Marking a methodology as reference rather than primary is itself a judgment that has to be defended on the page. Written well, it is the most valuable single page in the book; written as a list of hedges, it is the page that does the most damage.
Methodology selection and exclusion rationale
Every exclusion in a fairness opinion needs a ground in the facts of the specific transaction, not a general preference. A cash deal makes accretion / dilution irrelevant to the holders receiving the cash, because they retain no interest in the combined company. A strategic acquirer with committed financing makes a sponsor ability-to-pay solve a financing constraint rather than an indication of value. A company that has never paid a dividend has no dividend stream to discount. A business whose manufacturing, distribution and procurement are shared and centrally managed cannot produce a segment margin that is a measurement rather than an allocation. Each of those is a sentence, and each of them is checkable against the record.
Selected companies and precedent transactions
The two market yardsticks, and they answer different questions. The trading comparables say what the public market pays for a minority stake in businesses like this one on a given day. The precedent transactions say what an acquirer has actually paid to take control of one, which is a different number and usually a larger one. The spread between the two medians, expressed in turns of the subject's own Adjusted EBITDA, is the closest thing the case has to a measured control premium. Both sets have to be screened from the same unscreened extract, both need constituents that do not rank the same way on every dimension, and both need their basis labeled so trailing is never compared with forward.
The subject's own unaffected trading multiple
The observation that makes a comparable companies page legible, and the one most often left out of it. Before you apply a peer range to a subject you have to know where that subject itself traded, because the applied range is a judgment about the distance between the two. It is also what reconciles the multiple yardstick with the premium yardstick: a premium is measured from the subject's own unaffected price, and a multiple is measured against the peer set, so if the subject traded away from its peer band the same transaction will read as a large premium and an ordinary multiple at the same time — and neither statistic is wrong. Compute the subject's unaffected multiple, decompose the re-rating the consideration implies into the part that is simply the move back to the peer median and the part that is a genuine premium to the category, and you have converted two facts that appear to conflict into one fact described twice. A candidate who never computes it is left asserting that the two yardsticks disagree without being able to say why.
Discounted cash flow analysis
The only methodology in the set that values the company's own cash flows rather than someone else's transaction. Here it runs twice — once on the Board-approved plan and once on the case the Transaction Committee directed — off a December 31, 2025 valuation date, on a mid-year convention for the explicit years, with terminal value from an exit multiple on FY2030E Adjusted EBITDA discounted at the end-of-period factor. There is no standalone cost-of-capital page; the discount rate is one axis of a sensitivity grid and its derivation goes in a note. Two disclosures make the output honest: terminal value as a share of implied enterprise value, and the perpetuity growth the terminal assumption implies.
Premiums paid analysis
A distribution of what acquirers have paid over targets' undisturbed prices in comparable deals, expressed in percentiles and applied to this target's unaffected price. It belongs in the book because a board wants to know whether the premium it is being offered is ordinary, and it is not a valuation methodology because a premium is a fact about a stock's pre-announcement trading level rather than about the business underneath it. Two companies with identical cash flows and different unaffected prices generate different premiums and identical values. That is why it shades gray on the valuation summary, and why the percentile band you apply has to be computed by interpolation on the sorted sample rather than eyeballed.
Observed range versus applied reference range
The observed range is the minimum and the maximum of the screened set, and it is arithmetic. The applied reference range is where you judge this company belongs within that evidence, and it is an opinion with a written reason: above the set on one dimension, below it on another, therefore inside the observed range and bracketing the median rather than reaching for either tail. The distinction matters because the football field is drawn from the applied ranges, and a range presented as though it fell out of the data — when in fact it was chosen — is the version that cannot be defended when someone asks why the tails were cut.
Fairness disclaimer construction
The six clauses that define what the opinion says, in the order a board and its counsel expect to read them: reliance on information without independent verification; the assumption that the projections were reasonably prepared, with no view expressed on them; no independent appraisal of assets or liabilities and no opinion on solvency; the opinion speaking only as of its date with no duty to update; the scope limitation naming what is not addressed, including the underlying business decision and any term other than the consideration; and the use clause, which states that the opinion is for the board rather than for stockholders and discloses the fee, its non-contingent portion and any prior relationship with the acquirer.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: answer deck, Excel model and memo, built the way a banker would actually build them. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Approach to analysis page
- —Methodology selection and exclusion rationale
- —Selected companies and precedent transactions
- —Discounted cash flow analysis
- —Premiums paid analysis
- —Fairness disclaimer construction
Answer Deck
Full model answer, banker-formatted
Memo
The written recommendation and how it was reached
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the answer deck, the Excel model, the memo and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and PowerPoint Deck and Memo (PDF) and Answer Deck (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Project Dunmore — Fairness Opinion
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
What is a fairness opinion case study in an investment banking interview?
It is the most formally constrained exercise in the M&A repertoire. A board has agreed a price and asks its financial advisor whether that price is fair, from a financial point of view, to a defined group of holders. You are not negotiating and you are not recommending the transaction. You are selecting methodologies, expressing each as a range rather than a point, assembling them on one axis, and scoping what your opinion does and does not address. What gets graded is judgment rather than speed: which methodologies belong, why the excluded ones were excluded, whether the observed evidence and your applied judgment are kept visibly distinct, and whether the disclaimer actually says what a board and its counsel need it to say.
How should you allocate 120 minutes across a fairness opinion case?
Across all of it, not a quarter of it. A working budget: about 20 minutes reading the materials and keying in both projection cases; about 25 minutes screening the raw extract and building the selected companies, precedent transactions and premiums paid analyses, which is the largest single block because the screening judgment is graded; about 30 minutes on the two discounted cash flows and their sensitivity grids; about 15 minutes on the price ladder and the negotiation ladder; about 10 minutes assembling the football field; and about 20 minutes on the approach-to-analysis page, the six disclaimer clauses and the memo. The template asks for 254 distinct formulas, and it fills 716 cells once the two sensitivity grids and the constituent tables are filled right. The rate check is on distinct formulas at roughly 28 seconds each; the raw cell count is printed so nobody thinks it was hidden.
Why does a fairness opinion give a range of values instead of a single price per share?
Because a range is the honest output of the evidence and a point is not. Every methodology in the book produces a band: the trading comparables produce one because the peers do not trade at one multiple, the precedents produce one because control has not cleared at one price, and the discounted cash flow produces one because the discount rate and the terminal multiple are both judgments with defensible bounds. Collapsing those into a single number implies a precision the analysis does not have and invites the question of why that number rather than the one beside it. The opinion is about whether the agreed consideration falls within the ranges the evidence supports — and where within them it falls, because inside a range at the bottom and inside a range at the top are different facts about the same deal.
What is the difference between a valuation methodology and a reference-only analysis on a football field?
A methodology values the business; a reference describes something adjacent to it. The discounted cash flow values the company's own cash flows. The trading comparables and the precedent transactions value it by what the market pays for comparable earnings, either for a minority stake or for control. Those four render in the primary color. Premiums paid, published analyst price targets and the historical trading range render gray, because a premium is a fact about the target's pre-announcement price rather than about its intrinsic value, an analyst target is an undiscounted standalone twelve-month objective set without a change of control, and a 52-week range records what the market paid for shares nobody could use to acquire the company. Boards read the football field before they read anything else, so the shading is doing real work.
Why do you have to state the methodologies you did not use in a fairness opinion?
Because the omissions are where a challenge starts. If a plaintiff's expert can point to a standard methodology that would have produced a higher value and show that the bank never addressed it, the silence is the finding — not the number. So the approach-to-analysis page names every methodology considered and gives the actual reason each was excluded, grounded in the facts of this transaction rather than in general preference: what form the consideration takes, who the acquirer is, whether the company pays a dividend, what management does and does not prepare at segment level, whether a going-concern business's book value bears any relationship to what its brands are worth. Each exclusion should read as a sentence a witness could say aloud under oath without qualification.
What clauses have to appear in a fairness opinion disclaimer, and why does each one exist?
Six, in order. Reliance: you assumed the accuracy and completeness of what you were given and did not independently verify it. Projections: you assumed they were reasonably prepared on management's best available estimates and you express no view on them. No independent appraisal: you did not value the assets or liabilities and you express no opinion on solvency. Date: the opinion speaks as of its date, on conditions as they then exist, with no obligation to update. Scope: it addresses only the fairness of the consideration to the named holders, not the underlying business decision, not the relative merits against alternatives, not any other term of the agreement, and not compensation to management. Use: it is for the board, it is not a recommendation on how to vote, and here is the fee, the non-contingent portion of it, and every prior relationship with the acquirer.
About This Fairness Opinion / Board Materials Case Study
Fairness Opinion / Board Materials case study for investment banking interviews. 120-minute format covering approach to analysis page, methodology selection and exclusion rationale, selected companies and precedent transactions. Includes the full prompt, a model answer deck, a tied-out Excel model, a written memo and an audio walkthrough.
This case study sits in Investment Banking, under Mergers & Acquisitions. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
120-Minute Format
The time limit a real assessment would give you
Answer Deck
Included in the model answer
Excel Model
Included in the model answer
Memo
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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