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What is appraisal[]

Mergers involved the use of securities as consideration, usually exchanging shares for shares. Appraisal gives shareholders who object to the major structural changes and the securities being offered the right to dissent and seek a judicial decision on the fair value of their shares which would be paid in cash. Thus, appraisal is an exit strategy designed to protect shareholders by providing liquidity and an independent review of fair value. It was also meant as a check, or a monitoring device, to regulate those in control and to offer the shareholders a fair deal.

The New Delaware valuation methodology[]

The new valuation technique uses the traditional approach (see below) combined with modern valuation techniques; for instance, it includes valuation techniques generally acceptable in the financial community such as analysis of comparative takeover premiums or valuation based upon discounted cash flow.

Examples of cases that have used the new Delaware Block approach


Traditional (old) Delaware valuation methodology[]

States other than and including Delaware traditionally used a valuation methodology called the "Delaware block approach" to dtermine the fair value of the sahres of the dissenting sharehodlers. In appraisal, the court shoudl value what was taken from the shareholders, i.e., the proportionate interest in the going concern value of the corporatino. This approach determiens the value of shares by looking primarily at three different components

  • market value
  • earnings value
  • net asset value

Examples of cases that have used the traditional Delaware Block approach

  • Case Piemonte v. New Boston Garden Corp
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