Search Team

Search by Last Name
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z

Articles

Unlocking Intrinsic Value Through Appraisal Rights

September 16, 2013

Articles

Unlocking Intrinsic Value Through Appraisal Rights

September 16, 2013

Back to News Listing

A review of all Delaware appraisal cases in the last 20 years shows that the court has consistently established a “fair value” greater than the amount a buyer offered to pay for a stand-alone business. The only cases in which appraised value was less than the merger price — fewer than 20 percent of the decisions — were those in which the buyer was paying for something more than the value of the stand-alone business, such as synergies of a combination with the buyer’s existing operations or a resolution of disputes.

These results reflect the Delaware law’s definition of “fair value” as the long-term intrinsic value of a company, considered as a stand-alone “going concern,” and the state’s Supreme Court has recently made it clear in Golden Telecom Inc. v. Global GT LP, 11 A.3d 214, 217-28 (Del. 2010) that the court must make its appraisal independently of current market pricing or auction bids. In this context, it is reasonable to assume that a stand-alone buyer would not have offered to pay more for a company than what it was worth, and that a judge will reach the same conclusion. This logic is especially compelling when the buyer is a well-informed management insider partnering with professional private equity investors.

Fish attorney Jeremy Anderson and José Sierra wrote this guest article for Law360. Learn more about what has happened over the last 20 years and factors that play a part in determining fair value in an appraisal proceeding by reading the article, Unlocking Intrinsic Value Through Appraisal Rights.

Related Attorneys
Related Offices

Stay current with Fish Sign up for our Newsletter