What Is A Comfort Letter For Private Equity?

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What Is A Comfort Letter For Private Equity?

In a comfort letter, an issuer’s independent accountants provide certain assurances regarding financial information included in a registration statement, prospectus, or offering memorandum used for a securities offering to the underwriters or initial purchasers.

What Does A Comfort Letter Do?

A comfort letter is a letter that is written to someone who is in need. An assurance letter is a business document intended to assure the recipient that a financial or contractual obligation can be met with the other party. Auditors and accountants are often the senders.

What Is Included In A Comfort Letter?

In the registration statement, the audited financial statements and financial statement schedules are not included in the auditor’s standard report, and the comfort letter includes negative assurance with respect to subsequent unaudited condensed interim financial information included (incorporated by).

What Does A Comfort Letter Look Like?

An effective comfort letter should be structured in a way that no unnecessary legal formalities are added, and all statements made by the bank or organization should be valid and based on facts and opinions.

WHO Issues A Comfort Letter?

Certified Public Accountants can issue a comfort letter stating that the company’s financial statements do not indicate that there are any false or misleading statements and that the company’s prospectus complies with the prevailing accounting standards. An initial public offering is sometimes used as a reason for doing so.

How Do You Write A Comfort Letter?

  • The tone of the letter should be warm;
  • Please avoid describing in detail why you feel sorry for the addressee (i.e. Do not disassemble the prime factors of failure).
  • The line is used in private letters to describe emotions.
  • What Is A Comfort Letter In IPO?

    An accounting firm prepares a comfort letter to ensure a company’s financial soundness. In the due diligence process, comfort letters are typically signed prior to the pricing decision or closing date for a given public offering or other transaction.

    Who Is A Comfort Letter Addressed To?

    comfort letters may be sent to parties with a statutory due diligence defense under Section 11 of the act, other than a named underwriter, only when a law firm or attorney for the requesting party issues a written opin- ion to the accountants that states that such party has a due diligence defense

    What Is A Comfort Letter Legal?

    In a letter of comfort, you are assured that an obligation will be met in the future. It is common for letters of comfort to be couched in vague language, so as not to place the issuer in a legal bind.

    Is A Comfort Letter The Same As An Audit Opinion?

    In spite of the fact that audited financial statements are not audited, the comfort letter essentially states that they would not differ from those in the prospectus in any way. An initial public offering is the most common time for comfort letters.