“Sunshine is the Best Disinfectant”: A Financial Advisory Update

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Since December 2010, the Delaware Court of Chancery has been emphasizing the need for additional disclosures relating to financial advisors in merger and acquisition transactions. Because delay poses risk to closing any transaction, detailed and specific disclosure is recommended.

Since December 2010, the Delaware Court of Chancery has emphasized in at least four cases the need for additional disclosures relating to financial advisors in merger and acquisition (M&A) transactions. The court has focused on increasing the breadth, depth and specificity of disclosures regarding any potential conflicts the financial advisor may have in serving the various parties to the transaction, the role of and work performed by the financial advisor, and the fees received by the financial advisor. In each of these cases the court required additional disclosure and enjoined the transaction for a period of time to allow the information to be considered by stockholders. Because delay poses risk to closing any transaction, detailed and specific disclosure in these areas is recommended.

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