Cornerstone Research Report: Shareholders Challenge Fewer M&A Deals in 2017
SAN FRANCISCO (PRWEB) July 18, 2018 -- Shareholders of public target companies challenged 73 percent of merger and acquisition (M&A) deals valued over $100 million in 2017, according to a new Cornerstone Research report released today. While the majority of M&A deals continue to be the subject of shareholder lawsuits, in recent years the rate of M&A litigation has declined from the 2011-2014 peaks of more than 90 percent.
The report, Shareholder Litigation Involving Acquisitions of Public Companies, also shows a shift in venues for M&A litigation following the January 2016 decision by the Delaware Court of Chancery in In re Trulia Shareholder Litigation. This decision diminished the acceptability of disclosure-only settlements in merger objection cases.
“Post-Trulia, M&A deals litigated in federal court have increased, while the two most active state courts saw a substantial decline,” said Ravi Sinha, author of the report and a Cornerstone Research vice president. “In 2017, M&A litigation in federal court rose 20 percent from 2016. At the same time, the number of deals litigated in Delaware decreased from 37 to seven, and from 16 to three in California.”
A total of 112 M&A deals valued over $100 million had associated lawsuits in 2017, down from 137 in 2016. The average number of lawsuits per deal in both 2017 and 2016 was 2.8 - the lowest average in 10 years.
For the first time in a decade, more than 50 percent of M&A cases were voluntarily dismissed. Between 2009 and 2014, the annual rate of voluntary dismissal was under 20 percent.
Key Findings
- The Third Circuit was the most active federal court in 2017.
- The majority of litigation for 2017 deals was filed in only one jurisdiction.
- There were no deals in 2017 with more than nine lawsuits filed.
- In 2017, the first lawsuit was filed an average of 48 days after the deal announcement, compared to 40 days in 2016 and 21 days in 2015.
- The percentage of M&A deals for which litigation was resolved prior to closing has steadily declined, falling from 78 percent in 2012 to 43 percent in 2017.
About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for over twenty-five years. Named one of the Best Workplaces by Inc. Magazine, the firm has 700 staff and offices in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.
Please visit Cornerstone Research’s website for more information about the firm’s capabilities in economic and financial consulting and expert testimony.
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Susan Wittner, Cornerstone Research, http://www.cornerstone.com, +1 212-605-5002, [email protected]
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