Disclose, don’t withdraw

Author: | Published: 2 May 2012

Recent Delaware Court of Chancery opinions suggest financial advisers and corporate officers working on mergers will be subjected to an all-encompassing review of conflict disclosure as well as the remedial actions taken to protect against opposing incentives.

If they fall short, injunctions are not expected to provide much of a solution for shareholders.

When controversial conflicts arise and open the door to potential shareholder litigation, financial advisers might heed the warnings of chancellor opinions in El Paso Corporation shareholder litigation and Del Monte Foods Company shareholder litigation and decide to drop-out of deals.

"I don't think you should automatically jump to the conclusion that you have to withdraw, but I think you have to have robust disclosure – not with the company but with the board," said Kevin Genirs, a managing director and attorney in the investment banking division of Barclays in New York.

"To me, that's the important takeaway...