M&A lawsuits rapidly rising

Suits are up 847 percent since 2008

Is your company about to close a merger or acquisition? If so, the odds of having investigations pour in from plaintiffs firms with dollar signs in their eyes just increased exponentially.

Class action lawsuits accusing boards of directors of shirking their fiduciary duties when shopping for potential deals are now practically de rigueur, according to a Fox Business report published today. Plaintiffs firms increasingly are announcing investigations before the ink is dry on deal agreements, alleging boards agreed to subpar deals or failed to reach a “go-shop” period, which is intended to give companies 30 days to look for potentially better offers, the story says.

Figures presented by Securities Class Action Services show that there were 341 merger and acquisition lawsuits filed last year in the United States, rising 75.5 percent from 2009 and a whopping 847 percent from 2008. And despite only being about halfway through 2011, the total number of cases filed this year are on pace to at least match, if not exceed, last year’s total.

The apparent interest in these types of suits is that they rarely go to trial and often result in windfalls for firms looking to make a quick buck for very little work. Of course, some cases have legitimate grounds, but the report notes that they’re now about as prevalent as the California Condor.

Read more about this at Fox Business.

Read what litigation experts have to say about the phenomenon in “M&A Deal Lawsuits Soar,” which appeared in the May issue of InsideCounsel.

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