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Law360: Parsing M&A liquidity and fair value in Delaware and Caymans

May 4, 2022
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In both the Delaware Court of Chancery and Grand Court of the Cayman Islands, Court-determined appraisals of “fair value” are a common remedy for shareholders who claim that they were offered inadequate consideration for the purchase of their shares in merger and acquisition (M&A) transactions.

In this Law360 article, Erik Himan and Carlos Penikis discuss and contrast the potential implications of low liquidity in shares for such appraisals in the Delaware Court of Chancery and Grand Court of the Cayman Islands. They discuss how the low liquidity of a company’s shares can reduce or eliminate the reliance on its publicly traded market price in the appraisal of fair value in the Delaware Court of Chancery and the Grand Court of the Cayman Islands; and explain how the liquidity of a company’s shares may provide other opportunities to parties to argue for a price adjustment in appraisals in the Grand Court of the Cayman Islands.

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