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Court Of Chancery Explains Revlon Analysis

Posted In M&A

In re Dollar Thrifty Shareholder Litigation, C.A. 5458-VCS (September 8, 2010)

 Everyone knows that the Revlon decision says that a board has to seek the best deal when the company is for sale. This decision clearly explains how the Court will review the board's actions.

First, the Court will review the process used.  Adequate advice, full information, careful consideration and independent decision makers are all important.

Second, the Court will decide if the path chosen by the board was reasonable.  Note that the board has the burden of proof on this issue.  The opinion is particularly helpful in explaining what is a "reasonable" board action and carefully points out that standard is less forgiving than the rational basis test used in a business judgment analysis.

Tags: M&A