Value Management Inc. Reports Connection Between Sagging Economy and Increase of Litigation in Public Deals
Value Management Inc., a financial consulting firm specializing in valuing businesses, corporate securities and professional practices, cites report: Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions-March 2012 Update.
- (1888PressRelease) July 31, 2012 - Jamison, PA - Value Management Inc. cites report in its summer 2012 newsletter that reveals the sluggish economy has sparked a surprising, litigious, challenge to corporate America. According to the report: Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions-March 2012 Update, almost every acquisition of a large U.S. public company announced in 2010 or 2011 aroused multiple lawsuits.
Only a small percentage of lawsuits resulted in payments to shareholders however, according to the report. The majority of the suits settled for "additional disclosures or, less frequently, changes in merger terms, such as deal protection provisions."
To support the claim, the report outlined provided statistics. Of deals valued at $500 million or more, 53% attracted litigation. In 2011, 96% of deals valued similarly resulted in lawsuits by shareholders. Smaller transactions were not immune to this trend. Of deals valued at less than $500 million, 289 lawsuits were filed in 2007, compared to 502 lawsuits filed as a result of similarly valued deals.
Deals worth did not escape this trend either. Of the 15 lawsuits filed between 2007 and 2011 involving deals worth $100 million or less, 12 of these suits were announced during 2010 - 2011.
Delaware State claimed the dubious distinction of leading the trend with case filings climbing from 34% of all shareholder lawsuits in 2007, to 45% of all shareholder lawsuits in 2011.
Select industries seem to result more lawsuits than other industries according to the report, with energy attracting 8.6 per deal and consumer goods attracting 6.0 lawsuits per deal.