Chancery Court Sensitive to Potential Conflicts of Financial Advisors in M&A
September 7, 2011
Over the past few years, the level of disclosure regarding the work performed by a financial adviser rendering a fairness opinion in connection with an M&A transaction has increased substantially, due in part to decisions of the Delaware Court of Chancery. At the same time, the number of complaints challenging the adequacy of the disclosure with respect to potential conflicts of interest on the part of the target’s financial adviser is seemingly on the rise.
In a recent opinion in In re Ness Technologies Inc. Shareholders Litigation, the Court of Chancery has shown it is sensitive to these potential conflicts and may enjoin a transaction where the proxy statement omits material information regarding such potential conflicts.