On August 23, the SEC finalized a new rule (IA-6383) requiring private fund advisers to obtain fairness opinions or valuation opinions in connection with adviser-led secondary transactions.
Webinar Duration: 25:47
During this webinar, we will:
- Review the SEC valuation requirements or fairness opinions for adviser-led secondary transactions;
- Discuss the differences between fairness opinions and valuation opinions;
- Share tricks on how to save money on the professional fees for these engagements.
Speaker: Nick Newsad, MHSA, Healthcare Advisory Services
What to Know About the SEC’s New Valuation Rule for Adviser-Led Secondaries
On August 23, the SEC finalized Rule IA-6383, which requires private fund advisers to obtain either a fairness opinion or a valuation opinion when conducting adviser-led secondary transactions. This rule aims to enhance transparency and protect investors in the growing market for private equity secondaries.
Nick Newsad, MHSA, from LBMC’s Healthcare Advisory Services, breaks down what this rule means for fund advisers and offers practical guidance on compliance and cost management.
Understanding Adviser-Led Secondaries
Adviser-led secondary transactions occur when a private fund adviser offers existing investors the option to sell their interests or roll into a new investment vehicle. These transactions are increasingly common in private equity and real asset funds, and the SEC now requires more formal oversight to ensure investor protection.
The Role of Fairness and Valuation Opinions
Under the new rule, advisers must obtain either:
- A fairness opinion, which evaluates whether the financial terms of the transaction are fair to investors from a financial point of view.
- A valuation opinion, which estimates the market value of the assets involved, often used when fairness analysis is not required.
While both opinions serve to protect investors, they differ in scope and cost. Fairness opinions tend to be more comprehensive and expensive, while valuation opinions can provide a cost-effective alternative depending on the deal structure.
Choosing the Right Opinion for Your Transaction
Nick emphasized that not every transaction requires a fairness opinion. In many cases, a valuation opinion may be sufficient and acceptable under the new SEC requirements. Fund managers should carefully evaluate which type of opinion meets the regulatory threshold without incurring unnecessary costs.
Advisers should also consider the track record, industry expertise, and SEC familiarity of potential opinion providers. Working with a valuation partner who understands the nuances of healthcare, real estate, or alternative investments can streamline the process and strengthen compliance.
Tips to Reduce Professional Fees
During the webinar, Nick shared several practical tips for controlling costs while still meeting SEC expectations:
- Plan early to avoid last-minute engagements that may limit options and inflate fees.
- Bundle services with a trusted valuation partner when possible.
- Clarify expectations on the level of analysis and documentation needed to satisfy the rule.
Advisers who take a proactive and informed approach can meet regulatory obligations while avoiding unnecessary financial burden.
Conclusion
The SEC’s new valuation and fairness opinion requirement signals a broader shift toward transparency and oversight in private markets. Adviser-led secondary transactions are here to stay, and so is the need for credible, cost-effective valuation support.
If your firm is navigating this new landscape, LBMC’s valuation and advisory professionals are here to help. Contact us today to ensure your next secondary transaction meets regulatory requirements without breaking the budget.