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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 the memorandum on which the article's report of appraisal rights research was based, a variation of which is reportedly to be published in a legal journal, see

For a subsequently published version of the memorandum, see


Source: New York Times DealBook, September 10, 2013 article

Legal/Regulatory | Mergers & Acquisitions

Icahn’s Last Chance on Dell


Carl C. Icahn may have given up his campaign to block Dell Inc. from going private in a vote on Thursday. But the activist investor still has a good shot at another goal: getting more for his shares than the company’s founder, Michael S. Dell, wants to pay.

Mr. Icahn says he will seek appraisal rights in the Delaware courts, a legal maneuver that lets a judge decide how much Dell shares are really worth. And growing evidence indicates that he stands a good chance of coming out ahead by doing so.

In theory, seeking appraisal rights is a risky move – the judge could decide that Dell shares are, fundamentally, worth less than the the $13.75 each that Mr. Dell and the investment firm Silver Lake Partners are offering. Then Mr. Icahn would be stuck with that lower price.

But a new analysis from lawyers at Fish & Richardson suggests that it’s unlikely. In the last 20 years, Delaware courts have rarely settled on a value lower than the transaction price – and never in a deal like the one Dell is contemplating.

The findings echo those of at least two other analyses of appraisal rights cases, cited by Steven M. Davidoff, the Deal Professor, and by Gretchen Morgenson in The New York Times.

The latest analysis, which is planned for publication in Law360 on Wednesday, was carried out at the request of the Dell Valuation Trust, a fledgling effort to coordinate investors seeking appraisal rights in the Dell transaction. The trust is being organized by the Shareholder Forum, an organization run by a former investment banker, Gary Lutin, that seeks to inform investors.

The Fish & Richardson analysis found that, in 45 appraisal-rights cases in the last two decades, the courts have set a “fair value” below the corresponding transaction price for just eight deals, or about 18 percent of the time.

None of those eight outliers were “standalone” buyouts, where the company was being bought for its own sake, rather than, say, in order to fold it into another, similar company. Among standalone buyouts, the courts set share values at anywhere from 3.5 percent over the deal price to more than double the deal price.

In other words, if Mr. Icahn’s bid for appraisal rights follows the traditional pattern, it’s unlikely that he’ll receive less than $13.75 a share – and he may well receive more. The same holds for other investors who seek appraisal rights.

Mr. Lutin called appraisal rights “a value investor’s dream come true,” with pricing based not on the vagaries of the market, but on a company’s intrinsic value, as calculated by Delaware judges, who have considerable experience evaluating business arguments.

Nothing is guaranteed, of course. If Dell’s buyout vote fails on Thursday, the transaction falls through and appraisal rights are irrelevant — there’s no deal price to dispute. Some of the companies included in the Fish & Richardson analysis were small, and few deals anywhere match Dell’s in size or scope, leaving it an open question how predictive any retrospective analysis can be.

As for other investors, only those who have jumped through the right hoops ahead of the Thursday vote stand to benefit; other shareholders are stuck with what Mr. Dell and his partners are offering. Given the bureaucratic hurdles involved, it is likely to be too late for most investors to seek appraisal rights now if they haven’t started the process already.

In some ways, of course, it shouldn’t be surprising that investors often win when they seek appraisal rights.

Delaware courts are supposed to take multiple factors into consideration, including market value, asset value, dividends, earnings prospects and intellectual property values. The approach approximates how many investors would calculate a company’s “intrinsic” value.

In other words, to conclude that investors seeking appraisal rights should get less than the deal price implies that the buyers are overpaying on a fundamental level. That’s unlikely, the Fish & Richardson lawyers concluded.

“Management buyers, after all,” they write, “can be expected to know their company’s intrinsic value best and are not likely to convince the court that they knowingly offered to pay more than the company was worth.”


Copyright 2013 The New York Times Company


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

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

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