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support of long term investor interests in

Appraisal Rights


Intrinsic Value Realization




The Delaware Supreme Court issued a ruling on December 14, 2017 that endorsed its interpretation of the "Efficient Market Hypothesis" as a foundation for relying upon market pricing to define a company’s “fair value” in appraisal proceedings. The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for its participants' realization of intrinsic value in opportunistically priced but carefully negotiated buyouts. See:

December 21, 2017 Forum Report

 Reconsidering Appraisal Rights for Long Term Value Realization



Forum distribution:

Folding on appraisals and betting on litigation funding


Source: Financial Times, June 19, 2018 article


Mergers & Acquisitions

Delaware’s feared litigator rounds on state’s judges

Stuart Grant says its courts and politicians are too keen to woo corporations

Stuart Grant: 'Delaware has understood all along . . . that we have to be protective of our corporations, but it was never protective at the expense of the shareholders'

Sujeet Indap in Wilmington  [JUNE 19, 2018]


In a long career that has made him the most feared corporate lawyer in Delaware, home to a majority of the largest companies in the US, Stuart Grant’s legal work helped expand shareholder rights and secured investor victories over the likes of Hank Greenberg and Mark Zuckerberg among others.

His retirement from his firm Grant & Eisenhofer later this month may help company executives sleep a little easier, but Mr Grant is going out in typically ferocious style.

In an interview with the Financial Times, he launched a broadside against Delaware’s judges and legislators for kowtowing to corporations and against recent decisions that now shield most M&A from litigation.

“Delaware has understood all along . . . that we have to be protective of our corporations, but it was never protective at the expense of the shareholders,” he said.

More than 60 per cent of the S&P 500 is incorporated in the small mid-Atlantic state of just 1m people and its sophisticated corporate law doctrines. Many of them forged in the litigation over hostile takeover battles of the 1980s, are emulated in several others.

Mr Grant, a native New Yorker who began his career in the Wilmington outpost of the powerhouse law firm Skadden in the late-1980s, said the financial crisis’s impact on the state’s banking sector led the establishment in Delaware to emphasise steadier corporate fees which in 2017 were more than a quarter of total revenues.

“After the Great Recession there was a change within Delaware.”

He said he was also uncomfortable about how members of the court were also involved in promoting the state on trips organised by Delaware’s elected officials.

“One of the things about Delaware — and I have some qualms about it — is that our judiciary considers themselves ambassadors for Delaware, unlike any other judiciary . . . They’d have these junkets to talk about why Delaware law is so great, why the Delaware judiciary is great. And as part of that they’d spend a lot of time also at conferences, the overwhelming majority of which were sponsored by Corporate America and its lawyers.”

Unsurprisingly, local corporate and plaintiffs lawyers are disproportionately powerful in Delaware. Mr Grant himself has raised hundreds of thousands of dollars for state and national Democrats and has been involved in the group that helps nominate state judges.

Aged 58, he resembles what you would expect of a middle-aged lawyer outside of Manhattan: white, balding, bespectacled, and sporting plain business-casual clothes. He is candid and philosophical in his office overlooking the Christina River.

He and Jay Eisenhofer launched their eponymous firm in 1997 as ownership of public equities began to be dominated by mutual funds and pensions, who wanted attorneys with the Skadden pedigree that could litigate breaches of fiduciary duty by a company’s board of directors. He has tangled with the likes of Mr Zuckerberg, who was sued by Mr Grant for trying to create a new class of Facebook stock that would have perpetuated his control of the company. Mr Zuckerberg withdrew his plan before the Delaware Court of Chancery could rule on its validity.

His other achievements include the largest M&A settlement in Delaware history — $430m for shareholders of Digex related to its sale to WorldCom — and a suit over the 2011 buyout of Del Monte by KKR, which effectively ended the Wall Street practice of staple financing, in which sellside bankers offer financing to the private equity buyers.

“He is a passionate, ferocious advocate for his clients. I have tremendous respect for him. He is a shark,” said Daniel Fischel, a University of Chicago professor who has been an expert witness several times on the opposing side of Mr Grant’s clients.

Others, however, wonder if his success has made him a bully. Multiple people noted that he can be rough in dealing with both colleagues and opponents.

And Mr Grant’s retirement is not without controversy. Reuben Guttman, a former lawyer at G&E who is being sued by the firm over a fee dispute, accused Mr Grant, in his legal defence submission, of harassing female associates, though without giving specifics.

Mr Grant vehemently denied Mr Guttman’s allegation and said his retirement had nothing to do with the claim. “This is a case of fake news put out by someone who had a motive to put out fake news. What has been written about me is false, is offensive and its been hurtful.”

Mr Grant’s firm said no sexual harassment complaint had ever been made and the allegation was a “smear campaign”. Mr Guttman did not respond to request for comment.

Shareholders’ lawyers, like Mr Grant, believe that litigation acts as a deterrent against bad behaviour by chief executives and boards. However, breach of fiduciary duty claims became tougher to win after a 2015 decision in what is known as the Corwin case, and Mr Grant has been on the losing end of several recent “appraisal” judgments, including over the buyout of Dell, where shareholders had tried to get judges to bump up the price of a takeover to a higher fair value.

Mr Grant said that activist investors cannot alone police companies. “I’m not sure that institutional investors fully understand how the courthouse door has effectively been slammed in their face. And they do not have a viable alternative of the ballot box.”

While Mr Grant is leaving his firm, he is not leaving litigation. A litigation finance firm he co-founded, Bench Walk Advisors, now has close to $1bn in assets under management and he plans to expand it further, with a mandate to fund “anything with a legal thesis” around the world. So far it has financed lawsuits in areas as diverse as German insurance claims, Australian class actions and US intellectual property.

Despite his courtroom warrior reputation, Mr Grant said litigation was just a job for him. He recalled a courtroom exchange with Leon Black, founder of the private equity group, Apollo. “It got a little testy and I said to him on a break this isn’t personal to me. And Leon puts his arm around me and he says, ‘Stuart, if you win, we’ll take some money and we’ll push it over to your side. If we win, you’ll take some money and you’ll push it over to our side, that’s all that this is about.’”


Copyright The Financial Times Limited 2018.



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