Going Private Transactions - MFW's Bumpy Road to Business Judgment Review

March 18, 2014

Although the Delaware Supreme Court embraced application of the less rigorous “business judgment” standard of review for going private transactions by controlling stockholders under certain conditions, our analysis indicates that the calculus for controlling stockholders when structuring buyouts of subsidiaries or other controlled companies and assessing related litigation risks will remain largely unchanged. Thus, we believe it is unlikely that controlling stockholders will often be enticed to meet one of the key conditions required under this new ruling.