Table of Contents

Research Handbook on Mergers and Acquisitions

Research Handbook on Mergers and Acquisitions

Research Handbooks in Corporate Law and Governance series

Edited by Claire A. Hill and Steven Davidoff Solomon

Global in scope and written by leading scholars in the field, the Research Handbook on Mergers and Acquisitions is a modern-day survey of the state of M & A. Its chapters explore the history of mergers and acquisitions and also consider the theory behind the structure of modern transaction documentation. The book also address other key M & A issues, such as takeover defenses; judges and practitioners' perspectives on litigation; the appraisal remedy and other aspects of Federal and state law, as well as M & A considerations in the structure of start-ups. This Handbook will be an invaluable resource for scholars, practitioners, judges and legislators.

Chapter 14: Settlements and fees in merger litigation

Sean J. Griffith

Subjects: law - academic, corporate law and governance, finance and banking law

Abstract

The rate of merger litigation has more than doubled over the past decade, yet the vast majority of these cases end in ‘disclosure only’ settlements, which exhibit all of the indicia of litigation agency costs. This chapter offers a review of settlement practices in the Delaware Court of Chancery, America’s leading corporate law court, focusing on the role of the judiciary in approving settlements and awarding fees, demonstrating that the occasional reduction of attorneys’ fees has not been sufficient to stem the flood of merger-related litigation. The chapter then argues that in order for the Court of Chancery to solve the problem of merger litigation, it must consider more drastic measures. Specifically, the Court should either: (i) reject low value settlements as a matter of course; (ii) establish a presumptive no-benefit rule for disclosure settlements; or (iii) require proportionality of the settlement and release. Fortunately, there is substantial evidence, reviewed in the chapter, that the Court is now considering changes along precisely these lines.

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