Inside the Deck: How Lazard and Evercore Built the Fairness Opinions for Tesla's $2.6B SolarCity Deal

Every detail below comes from Tesla Motors, Inc.'s Form S-4/DEFM14A joint proxy statement/prospectus, filed with the SEC (CIK 0001318605), plus subsequent Delaware litigation testimony about how the underlying decks were built. Full source on SEC EDGAR.

What happened

On July 29, 2016, Lazard Frères & Co. delivered a written fairness opinion to the special committee of SolarCity's board. A day later, on July 30, 2016, Evercore Group delivered its own written opinion to Tesla's board. Both opinions, along with the underlying board presentations, were later filed with the SEC as exhibits to the joint proxy statement/prospectus for Tesla's roughly $2.6 billion all-stock acquisition of SolarCity, a deal notable not just for its size but because Elon Musk was chairman and largest shareholder of both companies, making this one of the more heavily scrutinized related-party mergers in recent corporate history.

The full record, proxy statement, opinion letters, and (following later Delaware litigation) testimony about how the underlying decks were built, is publicly available on EDGAR. It's a useful teaching case because it shows, in unusually granular detail, what actually happens inside a bank's deal team when a fairness opinion is prepared, and why the composition of that team matters as much as the math.

What the deck actually contained

A standard fairness opinion presentation, like the ones Lazard and Evercore built here, walks the board through a handful of standardized valuation lenses rather than a single number: comparable companies analysis, trading multiples (EV/Revenue, EV/EBITDA) of publicly traded peers, adjusted for growth and margin differences; precedent transactions analysis, multiples paid in prior M&A deals in similar sectors, capturing control premiums; discounted cash flow (DCF) analysis, projecting free cash flow off of management's (and sometimes the bank's own sensitized) financial model, discounted at a company-specific weighted average cost of capital; and premiums paid analysis, the offer price relative to unaffected trading prices over various lookback windows.

These outputs are typically stacked into a "football field" chart, horizontal bars showing the implied value range from each methodology, which becomes the visual anchor of the board discussion. In the Tesla/SolarCity case, this exercise was complicated by SolarCity's precarious liquidity position, part of Lazard's work involved assessing whether SolarCity risked breaching a liquidity covenant, which fed directly into the negotiating dynamic Evercore and Tesla's board used opposite Lazard.

Who does what on the deal team

The published deck is the visible output, but it's built in layers by a team with a strict division of labor. Analysts (typically 1-2 years out of undergrad) build and maintain the financial models, the DCF, the comps grid, the precedent transactions screen, and produce the first-draft slides. Much of the iterative work (updating a comp set as prices move, re-running sensitivities as management's projections change) happens at this level.

Associates (often 2-4 years in, sometimes post-MBA) own the model's structural integrity, check the analyst's work for errors, and start shaping the narrative of the deck, deciding which analyses get emphasized, how the football field is framed, and how the story supports (or stress-tests) the price being discussed with the board.

Vice Presidents manage the day-to-day relationship with the client's management team and, critically, the process, coordinating with legal counsel, managing the special committee's timeline, and making sure the deck answers the specific questions a board or special committee is likely to ask. In a related-party deal like this one, that included making sure the process itself (director independence, negotiating leverage, information flow) was defensible.

Managing Directors hold the senior relationship, deliver the oral opinion in the boardroom, and carry ultimate responsibility for the firm's institutional view on fairness. They're also the ones negotiating engagement terms and fee structure with the client at the outset, Lazard's and Evercore's own economic interest in the deal closing is itself disclosed in the proxy statement, a standard conflict-of-interest disclosure required under Item 1015 of Regulation M-A.

Why this deal is a useful study

Because Musk sat on both sides of the table, the proxy statement's "Background of the Merger" section, assembled largely from board minutes and advisor records, lays out an unusually detailed timeline of when each valuation was run, when management projections changed, and how the negotiating posture shifted in response. Students of deal structuring can trace, almost meeting by meeting, how a fairness opinion deck evolves from a first working draft to the version a board actually relies on to approve a transaction.