Today it is not a matter of whether a large corporate transaction will result in a lawsuit, but a matter of when and where. The Delaware Court of Chancery presides over an evolving and sophisticated body of law in which the apparent fairness of outcomes and reasonableness of negotiation and litigation decisions are intertwined and matter a great deal. Parties anticipating review, or even hoping to avoid it, would be wise to heed the lessons learned from 2013 and integrate litigation strategies at the outset of corporate decision-making.
Of the two cases selected for discussion here, In re MFW Shareholders Litigation, 67 A.3d 496 (Del. Ch. 2013), reflects a thoughtful pre-litigation strategy in which the transaction was structured with an eye toward favorably developing the case law. Counsel were rewarded with a ruling that provides defendants with an opportunity to have going-private transactions in which a controlling shareholder conditions the transaction on approval by both an independent committee of the board of directors and a majority vote of the minority shareholders analyzed under the business judgment rule rather than the entire fairness standard.
