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
JPMorgan Asset Management released their 2020 proxy guidelines in April, and, like many other investors we have covered, the guidelines support appraisal rights. JPMorgan Asset Management’s guidelines even lay out the value of appraisal rights in a short sentence, providing:
G. Appraisal Rights
Vote for proposals to restore, or provide shareholders with, rights of
Does increased appraisal risk have an effect on manager behavior? Recent research (unpublished) suggests it does.
In this paper (earlier version), the author examines target manager disclosure behavior before and after the significant Transkaryotic decision. Reviewing mergers before and after that merger, the returns, abnormal returns, and associated disclosures by target management, the author concludes
We previously posted about Domini Investment Trust’s proxy guidelines in favor of appraisal – the 2020 version reaffirms prior guidance, indicating Domini will “[v]ote for proposals to restore, or provide shareholders with, rights of appraisal.”
Per JDSupra, the Yukon Court of Appeal overturned a decision applying a discounted cash flow analysis to a Canadian appraisal proceeding, holding that the trial court failed to give proper consideration of merger price. Citing factors that would be familiar to a US practitioner, including the deal process, the existence (or lack thereof) of
The Principal Funds, a provider of a suite of investment products including ETFs and mutual funds, recommends voting for appraisal rights in its proxy guidelines. When it comes to mergers themselves, the Principal Funds take a case-by-case approach, considering a litany of factors, including “(1) prospects of the combined companies; (2) anticipated financial and
Global asset manager Artisan Partners’ proxy guidelines, like those of other asset managers we’ve covered, include a recommendation to vote for appraisal, specifically, to “Vote FOR proposals to restore, or provide shareholders with, rights of appraisal.”
Innovator, a provider of ETFs, provides proxy guidelines regarding how its funds will vote on various proposals. For appraisal rights, Innovator’s guidelines state to vote “FOR providing shareholders with appraisal rights.”
Proxy firm Institutional Shareholder Services (ISS) offers a number of proxy guidelines for specific funds, kinds of funds and separate interest groups. We recently wrote about ISS’s sustainability guidelines, which recommend voting in favor of appraisal rights. ISS also provides recommendations for Catholic funds and related entities. Per ISS: “Catholic Advisory Services Recommendation:
In a recent appraisal decision, Delaware Vice Chancellor Slights III awarded investors a 12% premium above deal price, fully adopting the discounted cash flow analysis Petitioners tendered, except for one minor adjustment. The case involved a three-way business combination of a privately held target turned public without minority shareholder approval. The court eschewed the use