Fiduciary Duties in M&A: What Directors Actually Owe
When a company's board decides to sell, merge, or restructure, the directors don't just get to do whatever they want. They owe fiduciary duties to shareholders — and in M&A, those duties get tested hard.
The baseline duties are familiar: care (make informed decisions) and loyalty (don't put your own interests above the company's). But in the deal context, courts have layered on a more demanding standard.
The Revlon Problem
Under Delaware law, once a board decides to sell the company in a change-of-control transaction, it shifts from "just run the business well" mode into Revlon mode — meaning the board's job becomes maximizing shareholder value in the near term. It can't favor one bidder for strategic reasons, protect management's jobs, or accept a lower offer because it "likes" the acquirer. The duty is to get the best price reasonably available.
The catch? Courts have spent decades arguing about when Revlon actually triggers. Cash deals?…
Interesting!