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Fairness Opinion: General Partner-led Secondary Transaction

Royalty Fund Seeks to Make a Final Distribution to Limited Partners


A royalty acquisition fund in its 14th year wanted to sell its remaining assets in order to make a final distribution to its limited partners.  Since an affiliate of the fund would be the most likely buyer, the limited partners formed a Limited Partner Advisory Committee (LPAC) to assess the purchase price and transaction structure.

The fund and its manager retained RNA, on behalf of the LPAC, to (i) prepare a range of fair market value indications for the remaining investments, and (ii) issue an opinion regarding the fairness of the consideration to be received by the fund in connection with the purchase and sale transaction.


Reviewed the manager’s financial models, third party royalty reports, publicly available financial information regarding other drugs, medical devices and companies, and the draft transaction documents, among other information, as part of its due diligence.


RNA prepared a detailed report for the LPAC regarding the fair market value of various royalty and debt investments in biopharmaceutical and medical device products and companies using the discounted cash flow method.

In addition, RNA delivered a written opinion to the Committee concluding that, as of the agreed-upon pricing date, the purchase price was fair, from a financial point of view, to the fund.

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