For years, M&A practitioners could reference a staggering statistic to catch the attention of clients: over 90 percent of public company deals resulted in stockholder litigation. Now, with rulings from Delaware courts reining in disclosure-only settlements and the increasing prevalence of forum-selection bylaws, the frequency of such lawsuits has fallen sharply, down to just 21 percent in the fourth quarter of 2015.
While notable, this decline does not provide a complete view of the risks facing dealmakers. Rather, dealmakers should remain circumspect, as the availability of the traditionally broad releases accompanying such settlements is reduced and, in the case of legal and financial advisers, lawsuits for aiding and abetting breaches of fiduciary duty become more prominent.
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