Court Of Chancery Explains Basis For Adviser Liability
In Re Rural Metro Corporation Stockholders Litigation, C.A. 6350-VCL (March 7, 2014)
This is an important decision explaining when advisers in a merger may be liable for aiding and abetting a breach of fiduciary duty. Liability may attach even for just a breach of the duty of care if the adviser is aware that it is facilitating that breach. The key here is that the advising investment banker was trying to make a fee from both the seller and the buyer in the same deal. This then is just the latest such case criticizing double dealing and it is now time for lawyers to be sure the advisers are not engaged in such conduct. The opinion is also a good road map for how a board ought to conduct the auction of a company. While there are many opinions that say there is no fixed way to sell a company, those who just ignore these guidelines do so at their peril.