Mergers & Acquisitions 2022 Annual Review

2022 M&A ANNUAL REVIEW Overcoming Entire Fairness Review in Delaware 2022 brought several victories for defendants despite the invocation of the entire fairness standard of review—one of the most rigorous standards applied in the Delaware Court of Chancery. These cases remind dealmakers involved in controller transactions that the application of entire fairness may still allow defense-side victories and that they can consider paths other than the MFW combination of an “ab initio” special committee and non-waivable disinterested shareholders’ vote. In one such case, the court concluded that, despite some hiccups in the process with the interested party initiating the deal and identifying special committee advisors, the special committee process was sufficiently robust, even without a stockholder vote, to prevail despite entire fairness review. 14 In reaching its conclusion, the court focused on, among other things, the fact that the majority of the special committee was independent, the special committee engaged independent advisors, the interested party ultimately removed himself from the committee’s deliberations, and the special committee was fully empowered and did, in fact, push back at critical moments. The court also noted favorably that the agreed-upon price was consistent with what the independent financial advisor deemed fair. 12 See Delaware General Corporations Law Sec.102(b)(7). 13 Menn v. ConMed Corp. (Del. Ch. June 30, 2022). 14 In re BGC Partners, Inc. Deriv. Litig. (Del. Ch. Aug. 19, 2022). Companies should consider the potential reaction of stockholders when asking for approval of such provisions in their charters.