Most Supplemental M&A Disclosures Aren’t Material

This article is the sequel to the author’s previous articles entitled Merger Agreements are Too Long and Disclosure Schedules are a Waste of Money.

When transaction parties draft M&A disclosures, they can almost always add more detail.  They have to make judgments about what information would matter to a reasonable stockholder.  Many months of negotiations may get summarized in a “highlight reel” of just a few pages describing the background of the transaction, and many spreadsheets worth of calculations and assumptions underlying financial projections may get presented in a few tables.

In recent years, a relatively small segment of the plaintiffs’ bar has made it their business to seek additional disclosures from merging parties.  We looked at a sample of 51 of the largest all-cash deals announced between January 1, 2024 and May 31, 2026 that had supplemental disclosures.  A handful of firms brought most of the publicized disclosure challenges in that time period.

The complaints themselves are often cookie-cutter.  Most make largely similar assertions of inadequate disclosure centered on a few recurring subjects.  For example, nearly half of the alleged disclosure deficiencies in that same 51-deal sample concerned financial-advisor analyses or management projections.

That concentration is unsurprising.  Financial-advisor analyses and management projections are areas in which additional inputs, assumptions and intermediate calculations can be disclosed at varying levels of granularity.  That makes them natural targets for disclosure challenges.  But the existence of an omitted input or a piece of banker math, without more, says little about whether the omission would matter to a reasonable stockholder.  Same goes for conversations.  There is always another facet of an interaction that could be described in greater detail.

As a legal matter, play-by-play or overly granular disclosure is not the goal.  The law recognizes that burying stockholders in immaterial information does not help them make better decisions.  Yet, in response to disclosure challenges, transaction parties often offer up supplemental disclosures (and pay a mootness fee) even when the additional information is obviously immaterial.  Dealmakers may advise their clients that doing so is the path of least resistance.  After all, litigating a disclosure challenge can consume management’s time and risk delaying the transaction closing, costs that can far exceed the average mootness fee.

Most supplemental disclosures seem to add very little to the total mix of information.  In our 51-deal sample, over three-quarters of the supplemental disclosures involved details analogous to those that at least one federal court has found to be immaterial.[1] Less than 0.2% of the supplemental disclosures included information of a type that a federal court has actually found to be potentially material.

The most common supplemental disclosures describe inputs used by financial advisors in their analyses.  In many cases, the supplemental disclosures simply provide more details of a type that would allow a stockholder to replicate some of the financial advisor’s math.  Here are a couple of examples, with the supplemental language underlined.

Using the Financial Forecasts and the Tax Asset Forecasts, [Financial Advisor] performed an illustrative discounted cash flow analysis on the Company to derive a range of illustrative present values per share of Company common stock, using a number of fully diluted shares outstanding provided by Company management based on [A] million outstanding shares of Company common stock, [B] million outstanding Company Options (using the treasury stock method), [C] million outstanding Company RSUs and [D] million outstanding Company PSUs (assuming target performance).[2]

[Financial Advisor] reviewed stock price targets for shares of [Company’s] common stock in [#] publicly available Wall Street research analyst reports as of [date] which indicated low and high stock price targets for [Company] ranging from $[X] to $[Y] per share (with a median price target of $[Z] per share).[3]

Other common types of supplemental disclosures focus on the transaction process and potential conflicts of interest.  Those subjects can impact how stockholders will decide on the transaction.  But the supplemental details offered to stockholders often add little to the picture already presented and, in many cases, merely disclose the absence of facts, not the occurrence of facts.  Here are a few examples:

The Prior Transaction Committee was formed for convenience to permit the Board of Directors to exercise efficient oversight of Company management and was not formed because of any actual or potential conflicts of members of the Board of Directors. It was formed in light of interest expressed by a third party in a potential strategic transaction with the Company. However, such third party informed the Company that it was no longer interested in a transaction before the Prior Transaction Committee held its first meeting. While the Prior Transaction Committee never met, it was never formally disbanded. No members of the Prior Transaction Committee were paid any compensation in connection with their service on the committee.[4]

At no point did the parties discuss [Employee’s] employment with [Target], [Buyer Parent] or any affiliate of [Buyer Parent] following the closing of any potential strategic transaction between [Target and Buyer].[5]

There is no question that the additional details were absent prior to the supplemental disclosure.  But missing does not mean material or even relevant.  Under the federal courts’ guidance, the key is whether the missing information would significantly alter the total mix of information.[6] The data suggest that the overwhelming majority of supplemental disclosures do not.

Link to the full article can be found here.

1For purposes of our analysis, the relevant federal court decisions are Jaroslawicz v. M&T Bank Corp., 962 F.3d 701 (3d Cir. 2020); Karp v. First Conn. Bancorp, Inc., 69 F.4th 223 (4th Cir. 2023); Kuebler v. Vectren Corp., 13 F.4th 631 (7th Cir. 2021); In re Walgreen Co. S’holder Litig., 832 F.3d 718 (7th Cir. 2016); Belcher v. Volta Inc., 714 F. Supp. 3d 379 (S.D.N.Y. 2024) and Berg v. Akorn, Inc., 2025 WL 755704 (N.D. Ill. Mar. 10, 2025).(go back)

2Electronic Arts Inc., Definitive Additional Materials (Schedule 14A) (Dec. 15, 2025).(go back)