Regulatory: M&A in the Boardroom

Gardner DavisThe RevlonDoctrine requires the board of directors, when dealing with the sale of the company, to seek the best value reasonably available for the stockholders. Moreover, courts apply "enhanced judicial scrutiny" to probe the deliberative process and the information relied upon by the board of directors, as well as the reasonableness of the directors' decisions.

Although the Delaware courts routinely articulate a policy of deference to the board of directors' judgment, such as "directors are not insurers" and there is "no single blueprint" that must be followed, the reality is that the Chancery Court is quick to fault the board for not doing enough to satisfy Revlon and therefore find a breach of fiduciary duty.

Gardner Davis

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