Mitigating Appraisal Risk In Private Equity Transactions

By Matthew Abbott, Angelo Bonvino, Marco Masotti and Taurie Zeitzer (June 8, 2017, 3:25 PM EDT) -- Although still a minority of M&A transactions, appraisal actions are on the rise. In 2012, 20 transactions involving Delaware-incorporated target companies were challenged, but in 2016, this number increased to 48, representing a 240 percent bump in four years. Further, these figures do not include transactions where appraisal demands were settled before the 120-day deadline for filing an appraisal petition. With this recent uptick in appraisal litigation, private equity firms should understand the associated risks for, including some that may be unique to, PE deals.

Recent Delaware decisions and anecdotal perceptions (real or otherwise) have suggested that private equity-led buyouts may...

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