meaning of arm's-length transaction

arm's-length transaction meaning in Business Dictionary

Basis of deciding fair marketplace price (FMV), it really is a dealing between independent, not related, and up to date parties looking out for their specific interests. Transactions concerning members of the family, and parent organizations and subsidiaries, are deemed arm-in-arm dealings. To be considered as an arm's length deal, neither of the involved parties might have any interest in the exchange's effects to the other party.