Appraisal litigation is unique under Delaware law. In almost every instance you can think of, once an event provides a right to recover damages (such as a fire caused by negligence), what happens later is relevant to determining the amount of damages. For example, the actual future earnings of a business is relevant to a claim for lost profits. But, that is not always so in an appraisal case. There the valuation of the company involved is determined as of “the point just before the merger transaction ‘on the date of the merger,’” see Merion Capital v. Lender Processing Services, (Del. Ch. Dec. 16, 2016).

That standard may well mean that even if the company strikes gold a day after the merger, that fact cannot be considered in determining the fair value of that company. This seemingly odd result is based on the rationale that the value should be based on what someone would pay for that company on the merger date in an arm’s-length transaction free of any improper restraints on the active market for that company. The problem this presents is that it is often not entirely clear how to apply this “date of the merger” test. Suppose the gold was on the company’s own property; can it be said that was not part of the company value even if unknown on the merger date?

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