In the aftermath of the long-awaited Delaware Supreme Court appraisal decisions in Dell (which we reviewed in a previous note) and DFC, there was cautious optimism that the court’s guidance would eliminate or at least significantly reduce the uncertainty that surrounded appraisal proceedings in Delaware courts in recent years. It was hoped that the decisions would improve predictability and consistency in the application of different valuation metrics used to appraise the fair value of target companies.

In both Dell and DFC, the Supreme Court held that if the deal price resulted from a robust, informed and competitive process and arm’s-length negotiations, the trial judge would be required to assign substantial weight to the deal price as evidence of fair value in subsequent appraisal proceedings. While the Supreme Court did not take the final step of adopting a presumption in favor of deal price as the sole measure, the decisions strongly suggested that, if a deal resulted from a well-designed and competitive process, parties could expect that the deal price would be decisive in appraisal.

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