Predicting the price likely to result from a judicial appraisal of an acquired company’s shares continues to vex acquirers and stockholders alike. The principles for determining appraisal values received a lot of attention following the Dell and DFC decisions by the Delaware Supreme Court in the latter part of last year, each of which reversed a Delaware Chancery Court decision that had found a company’s appraisal value to be greater than the underlying deal price. In both cases, the Delaware Supreme Court endorsed reliance on efficient market principles, but declined to establish a presumption in favor of the negotiated deal price, even in an arm’s-length transaction, and reiterated the obligation of a court conducting an appraisal valuation to consider “all relevant factors.”

Two recent Delaware Chancery Court decisions illustrate the ways that courts are approaching appraisal valuation in light of this guidance, and the ways that valuation methodologies can diverge, depending on the underlying deal process and other factors...

Originally published in Law360 on September 4, 2018.