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Going Private At The Intersection Of The Market And The Law, Faith Stevelman

Articles & Chapters

Delaware's fiduciary doctrine governing going private transactions by controlling stockholders is presently in disarray. Controllers generally select between single step cash-out mergers and tender offers followed by short-form mergers to do these freezeouts, and they are subject to very different equitable standards depending on the format selected. Further disarray arises because the courts' longstanding commitment to strict scrutiny in freezeouts is in tension with the popular disfavor towards private class-action litigation. This disarray threatens minority investors' interests in freezeouts, and capital market values more broadly. First, the disparities in freezeout doctrine have encouraged controllers to arbitrage the legal standards for …