While the appraisal landscape, and many of the major appraisal decisions of the past few years, have concerned the appraisal of public companies, it is critical for investors and practitioners to not lose sight of private appraisal.

Appraisal rights can be available to shareholders of privately held corporations, and can be exercised when a private company is taken over.  As an example, shareholders of private company Zoox have demanded appraisal [$$] resulting from Amazon’s purchase of Zoox for about $1.3 billion, arguing that this price was well below what Zoox was valued at in recent rounds of capital raising.

Notably, the same shareholders seeking appraisal had previously sued Zoox under Section 220 of the Delaware General Corporation Law, seeking books and records related to the deal.  As we have noted , appraisal and Section 220 demands are increasingly becoming intertwined as they offer shareholders, especially private company shareholders, one of the only effective remedies to get additional information about deals potentially hostile to their interests, and, for appraisal, one of the only effective remedies for minority shareholders to be properly compensated for their interests.

The Zoox appraisal demand is a reminder that appraisal is a relevant right to far more than just investors pursuing an “appraisal strategy” – private equity firms, startup employees and any other minority shareholder should be aware of their appraisal rights (and other shareholder rights) and protect their interests.  This becomes especially relevant when an investor is considering an investment, and then, when that investment is acquired or engages in another corporate act allowing appraisal.