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The Shareholder Forumtm

special project of the public interest program for

Fair Investor Access

Supporting investor interests in

appraisal rights for intrinsic value realization

in the buyout of

Dell Inc.

For related issues, see programs for

Appraisal Rights Investments

Fair Investor Access

Project Status

Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.

Note: On December 14, 2017, the Delaware Supreme Court reversed and remanded the decision above, encouraging reliance upon market pricing of the transaction as a determination of "fair value." The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for the realization of intrinsic value in opportunistically priced but carefully negotiated buyouts.



For a report of a Forum project supporting Dell investors' consideration of the appraisal rights addressed in the article below, see

Note: According to section 262(h) of the Delaware General Corporation Law relating to appraisal rights, "interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate," rather than at only 5% as stated in the article below.


Source: Financial Times Lex, May 27, 2013 commentary



May 27, 2013 4:44 pm

Appraisal rights: the oracle speaks

Having judges opine on value is perilous, but might be satisfying and entertaining in the case of Dell

It is said that corporate valuation is an art. But would it not be satisfying if occasionally it could be scientific, as if proclaimed by an oracle? In this world our oracle is the Delaware state court, which is empowered to declare a definitive valuation in so-called appraisal hearings. Think of appraisal hearings as a chance to have your school algebra exam remarked. Disgruntled shareholders in an M&A deal that closes in spite of their objection can have a judge set a binding value for their shares. The dissenter is entitled to that decreed price along with 5 per cent annual interest (meaningful in the current environment) for time elapsed since closing. The exercise of appraisal rights is rare given the risk (the judge can set a lower value than the deal price), timing (often years) and expense (hiring advisers and expert witnesses), but is increasingly prominent. Aggrieved shareholders have broached it as a remedy in the recent Dell and Clearwire battles.

Like anything involving hedge funds, appraisal is a complex dance. Threatened appraisal can move a bidder to boost its offer (as Sprint has done in Clearwire) because the bidder does not want the uncertainty of having to pay a holdout more money years down the road. And the appraisal proceeding involves intense scrutiny of valuation that digs into such esoterica as equity risk premium calculations.

A standard route for objecting shareholders in M&A has been suing boards of directors for breach of fiduciary duty. This process has been exposed as a sham where plaintiffs’ lawyers get a few hundred thousand dollars for more text added to the merger proxy but shareholders get no more actual money. Having judges opine on value instead of markets and boards is perilous. But now and then getting a definitive answer, even from a judge, in controversial situations such as Dell would be satisfying and entertaining.


© The Financial Times Ltd 2013


This project was conducted as part of the Shareholder Forum's public interest  program for "Fair Investor Access," which is open free of charge to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The management of Dell Inc. declined the Forum's invitation to provide leadership of this project, but was encouraged to collaborate in its progress to assure cost-efficient, timely delivery of information relevant to investor decisions. As the project evolved, those information requirements were ultimately satisfied in the context of an appraisal proceeding.

Inquiries about this project and requests to be included in its distribution list may be addressed to

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