According this report from Cornerstone Research, the number of mergers where appraisal was demanded has returned to levels seen in 2012-2015, demonstrating a further decline from the spike in appraisal in 2016. We covered the start of the reversion in 2017 previously. To begin, a caution. This is a raw numerical comparison of the number of mergers where an appraisal petition was filed across years – it does not necessarily quantify the percentage of mergers where a petition was filed, no less specifically Delaware mergers, no less Delaware mergers where the nature of the consideration and size of the company suggests an appraisal petition may have been possible. As a simple example – if more stock for stock deals are occurring, appraisal will be less likely, because in Delaware appraisal is not available in pure stock for stock deals. With that said, there is a general view that recent cases have diminished the appetite for appraisal cases; but this may be missing the thrust of those cases and of the movement in the appraisal world more generally. Two trends we have written about before: the increasing relevance of sales process and the increasing cohabitation of appraisal actions with the space usually occupied by breach of fiduciary duty actions may have created a bifold reaction – less appraisal on mergers where the process is more defensible, and/or higher premia for mergers where the process is less defensible. Recent scholarship has linked appraisal and other shareholder protections to higher merger premia for shareholders.
Appraisal is, like much of corporate law and finance in general, becoming more multi-jurisdictional (within the US) and more global in general. Thus what Cornerstone also does not capture is the filing of appraisal petitions in other states (such as Florida) or around the world. That is not to say that the incidence of appraisal is increasing; but as has been observed before, despite predictions of the death of appraisal, it continues to be a viable shareholder remedy.
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