2025 M&A/PE Key Developments

Below, we discuss key 2025 developments in each of the following areas:

AI

AI fervor is ubiquitous—it has been a key driver of M&A activity this year, as almost all companies in almost all industries now view it as imperative to have these capabilities. The surge in overall M&A activity seen in the third quarter this year was led by large deals (those valued at $5 billion or more), and about one quarter of these large deals had an AI theme, relating to building in-house capabilities, enhancing existing product offerings, acquiring data center products, or responding to AI-related power demands. (Outside M&A, there were also large “acquihires,” where companies acquired AI experts, licensed intellectual property, or invested in minority stakes to obtain AI capabilities.) In addition, AI is increasingly being used as a support tool throughout the life cycle of the M&A process—to locate deals, assess risk, analyze historical deal data, automate due diligence and disclosure schedules, manage the regulatory approval process, produce documents, and facilitate post-closing integration.

Activism

Activism is well-established as a year-round and permanent feature of the corporate landscape. Activism surged in the second and third quarters of this year. There were 61 new campaigns launched in Q3 2025 (compared to 36 new launches in Q3 last year). Nine of the 3Q 2025 campaigns were launched by Elliott Management (a major activist, with over $76 billion in assets under management). Activist activity is on-track to exceed 2024’s total of 243 campaigns, which was the highest level of activity seen since 2018. The increased activity may reflect opportunities created by market uncertainty and depressed stock prices resulting from the Administration’s tariff policies, followed by a resurgence of confidence as the M&A market rebounds, regulatory uncertainty lessens, and activists have been successful in their campaigns.

Reflecting the maturity of the activism space, we have seen, increasingly, higher caliber director slates proposed by activists; more no-vote campaigns targeting individual directors; sophisticated use of data analytics and AI to formulate challenges and proposals; and extensive use of social media to reach and influence stockholders. There has been intense focus on CEOs—with activists regularly calling for companies to replace the CEO and boards showing less patience with underperforming CEOs. In 2025, through the third quarter, there were 25 CEOs of U.S. companies who left their positions within twelve months of the commencement of an activist campaign, on track to exceed the record 27 such departures in 2024 for the year.

Also of note, activists continue to target large-cap (over $10 billion) and mega-cap (over $25 billion) companies—which represent between roughly 20% and 30% of campaigns in the most recent years; first-time activists commenced a greater proportion of campaigns (about two-thirds of all campaigns) than ever before; M&A remains a predominant theme—representing about 40% of campaigns in most years; campaigns targeting U.S. companies now comprise about 47% of global activist activity—compared to 69% a decade ago; and newly spun off companies continue to attract activists—with about a third becoming the target of a campaign within 36 months of the spinoff.

Advance Notice Bylaws

Recent Delaware decisions on advance notice bylaws have focused on the different judicial approaches applicable to facial validity challenges as distinguished from as-applied challenges. The decisions amplify the themes the Delaware Supreme Court articulated last year in Kellner v. AIM (July 11, 2024) (“Kellner II”)—i.e., facial invalidity claims will be successful only if the bylaw cannot operate legally under any circumstances; and as-applied claims will be reviewed under enhanced scrutiny.

In Siegel v. Morse (April 14, 2025), the Court of Chancery held that an as-applied challenge was not ripe for judicial review because the plaintiff had not tried to nominate directors, nor had intended to do so, nor could identify any other stockholder who had done so or intended to do so and was deterred by the bylaw. The plaintiff’s argument that the bylaw had a chilling effect on potential future nominations was insufficient to create a genuine and extant controversy ripe for review, the court held. The court reached the same result in Assad v. Chambers (June 2, 2025).

In Wright v. Forello (Oct. 27, 2025), the court considered a facial validity challenge (which was ripe even though the stockholder had not nominated nor intended to nominate a director). The court rejected the plaintiff’s contention that the bylaw at issue could not operate legally under any circumstances. The court acknowledged that the drafting was dense and difficult to parse through, but concluded that, unlike the bylaw that was found invalid in Kellner, this bylaw was not “incomprehensible” such that it could not operate legally under any circumstances. The court acknowledged that the bylaw’s requirements might be overbroad and might operate inequitably, but, as the challenge was to the bylaw’s facial validity, the court did not consider those issues.

In Vejseli v. Duffy (May 21, 2025) (bylaw adopted in the context of a proxy contest), and in Barnwell Industries v. Sherwood (2025) (bylaw adopted on a “clear day”), the court, applying enhanced scrutiny (as directed by Kellner II), found that the board’s rejection of a noncompliant nomination notice was equitable.  Notably, in Vejseli (a post-trial decision), the court upheld the board’s rejection of the notice even though the court found that the board had breached its fiduciary duties when it changed the board’s size to reduce the number of seats up for election and then delayed disclosing the change. To remedy the breach, the court ordered that the ten-day nomination window be reopened. Upholding the validity of the advance notice bylaw, however, the court emphasized that its requirement for disclosure of agreements relating to the stockholder’s nomination served important corporate purposes, including full disclosure to stockholders; that the board’s rejection of the notice was not pretextual; and that the stockholders could have complied with the bylaw’s requirements but did not. (Also of note, the court suggested that even nomination-related agreements that had recently been terminated potentially had to be disclosed under the bylaw; and that, in any event, a provision in a terminated agreement that had survived such termination had to be disclosed.)

These decisions underscore the importance of drafting advance notice bylaws clearly (particularly the often-challenged provisions relating to disclosure of information about persons “associated” with or “acting in concert” with the nominator), and suggest that a board, when it rejects a nomination notice, should articulate and establish a record as to the corporate interests it is protecting.

Antitrust

The DOJ Antitrust Division and the Federal Trade Commission leadership have signaled that they intend to enforce the antitrust laws vigorously. The antitrust agencies have continued to pursue many (although not all) of the enforcement actions brought by the last administration, and have initiated new enforcement actions across a variety of industries. The biggest change from the prior administration was in merger enforcement, with the return of divestiture remedies as an acceptable avenue for resolving consolidation concerns. Expectations are that 2026 will continue to be characterized by a similar antitrust environment, where enforcement theories remain on familiar grounds, and settlements rather than high-stakes litigation are the norm.

Divestiture remedies. In June 2025, the DOJ Antitrust Division announced its first merger settlement in years, marking a reprise of divestiture remedies as a tool to resolve competition concerns arising from proposed mergers. The settlement resolved the DOJ’s competitive concerns with Keysight Technologies’ proposed acquisition of Spirent Communications plc. The settlement was centered on a sale of three Keysight companies to Viavi Solutions Inc., a strategic buyer with a presence in the areas of concern. (Fried Frank advised Viavi in connection with its original bid to acquire Spirent and the subsequent divestiture transaction.) This transaction was the first in a series of settlements resolving FTC and Antitrust Division investigations into mergers. Through these settlements and public statements, the agencies have signaled that settlements are once again an acceptable way of resolving agency concerns—a sharp departure from the previous administration’s stance. Where a transaction presents discrete, remediable issues and the parties can present a structural divestiture to an appropriate buyer, we expect that the agencies will continue to accept resolving issues through consent decrees.

New whistleblower program. In July 2025, the DOJ Antitrust Division and the U.S. Postal Service launched a whistleblower program offering financial rewards up to 30% of the recovered criminal fine to parties reporting an antitrust violation. This marks the first time that the Antitrust Division will offer rewards to those who report antitrust violations. With a new incentive for whistleblowers to report potential criminal antitrust violations, companies should anticipate an increase in DOJ activity around potential violations. Companies should ensure they have robust antitrust compliance policies, training and reporting systems in place —or work with counsel  to develop them. The whistleblower rewards program builds on DOJ’s existing programs that encourage reporting of antitrust crimes. This includes DOJ’s longstanding antitrust leniency program, which provides that individuals and corporations who report criminal antitrust activity can in some cases avoid criminal charges and trebling of damages in civil cases. Additionally, in 2024, DOJ announced programs where individuals can receive benefits for voluntarily disclosing certain corporate crimes. Under the new program, it is critical that companies respond quickly, keep potential whistleblowers informed about internal investigations, and consider self-disclosures to the DOJ when appropriate.

Board Minutes

Sjunde AP-Fonden v. Activision Blizzard (Oct. 2, 2025) (“Activision II”) is yet another in a series of decisions in which the Court of Chancery, in light of the absence of discussion in board minutes as to the reasons for certain board decisions, concluded that the board did not consider the issues at all. In this case, the minutes did not provide reasons for key sale process decisions, including whether an allegedly conflicted CEO should lead the sale process, whether the range for price negotiations that the CEO set was appropriate, and whether an allegedly conflicted financial advisor should be engaged. The decision highlights the importance, at least in certain circumstances, for a board to establish a record in board minutes as to the issues the board addressed and the reasons for the board’s decisions.

Books and Records

The Delaware courts have strongly encouraged would-be plaintiffs to utilize DGCL Section 220 prior to filing lawsuits. Following that advice, plaintiffs have been more successful in framing pleadings alleging corporate misconduct that survive the pleading stage of litigation. Also, there has been a plethora of Section 220 cases, challenging companies’ refusal or limited access following such demands. Although the New DGCL Amendments provide greater clarity with respect to Section 220 and should be effective in many cases in restricting access to books and records, we expect that Section 220 cases will continue to be a regular feature of Delaware litigation as the Amendments’ requirements are tested in the factual context of individual cases.

Still low bar for credible basis. A Delaware Supreme Court decision, issued after effectiveness of the New DGCL Amendments, indicates that the courts may continue to view the “credible basis” test under Section 220 as setting a particularly low bar for access to books and records. In Wong Leung Revocable Trust v. Amazon.com (July 28 2025), the Supreme Court reversed the Court of Chancery’s dismissal of a Section 220 action, brought by a trust representing Amazon shareholders, where the stated purpose was to investigate wrongdoing by Amazon fiduciaries in connection with suspected anticompetitive practices by the company. The trust asserted that there was a credible basis from which to infer possible wrongdoing given ongoing litigation and investigations in which it was alleged that Amazon had engaged in anticompetitive activities. The Supreme Court, stressing that the credible basis test imposes the “lowest possible burden of proof under Delaware law,” stated that even lawsuits and investigations that have not advanced beyond unresolved allegations can demonstrate a credible basis.

Also notable, in State of Rhode Island Off. of Genl. Treas. v. Paramount Global (Jan. 29, 2025), Vice Chancellor J. Travis Laster held that newspaper articles citing anonymous sources provided a sufficient credible basis to suspect corporate wrongdoing under Section 220. The Vice Chancellor stressed that such information, although hearsay, was sufficiently reliable, at least in this case, as the reporting was from reputable publications that had extensive policies relating to their reporters’ use of anonymous sources.

Response to Section 220 demands. Corporations receiving Section 220 demands should review them for compliance under the requirements set forth in the New DGCL Amendments—confirming, for example, that the purpose is described with “reasonable particularity” and that the books and records sought relate to the stated purpose. Generally, only the books and records specified in the New DGCL Amendments should be provided, with the burden on the shareholder to establish that the request meets the standards for obtaining other materials (relating to “functional equivalents” and “compelling need”) set forth in the Amendments. Companies should maintain a careful record of board decisions, and should ensure that the company’s public disclosures are fully consistent with the minutes of board meetings. To the extent books and records are provided, a company should impose the confidentiality and related restrictions that the Amendments expressly permit.

Buyer Aiding and Abetting Liability

The Delaware Supreme Court, in Mindbody (Dec. 2, 2024) and Columbia Pipeline (June 17, 2025), has established a new, higher bar for third-party buyer aiding and abetting liability for sell-side breaches of fiduciary duties. With the Supreme Court’s reversal of the lower court’s decisions in these two cases, there is still no case in which a third-party buyer has been found to have aiding and abetting liability.

In Activision II (Oct. 2, 2025), the Court of Chancery stated that the Supreme Court’s message in Mindbody and Columbia Pipeline “rings loud and clear”: it is difficult to plead or prove third-party buyer aiding and abetting claims. The plaintiff must show that the buyer had “actual knowledge” of the sell-side fiduciary breaches, encouraged or exploited those breaches, and had actual knowledge that its own conduct was wrongful. Generally, constructive knowledge of a target’s sale process fiduciary breaches is not sufficient, nor is a failure to correct flawed disclosure even if there was a contractual obligation to do so.

Notably, in Wei v. Levinson (June 2, 2025) (“Zoox”), the Court of Chancery, in dismissing claims asserted against Amazon for aiding and abetting alleged sell-side fiduciary breaches when it acquired Zoox, stressed that the significant concessions Amazon made on deal terms during its negotiations with Zoox supported a conclusion that, whether or not Amazon had been aware of the sell-side conflicts, there was no evidence that it had tried to create or exploit the conflicts.

These decisions highlight that there is a heavy burden on a plaintiff to plead or prove third-party aiding and abetting liability. To help protect against aiding and abetting claims, buyers should document the concessions they make during negotiations.

Caremark Liability

New DGCL Amendments. Caremark pleadings that have survived the pleading stage typically have been framed based on information discovered in books and records produced in response to Section 220 demands. As the New DGCL Amendments significantly narrow stockholders’ access to books and records under DGCL Section 220 for the purpose of investigating possible corporate wrongdoing, it is likely to become more difficult for stockholders successfully to plead Caremark claims.

Failure of oversight of legal compliance. In Brewer v. Turner (Sept. 29, 2025), the Court of Chancery arguably took a more expansive view of potential Caremark liability than it has previously with respect to a failure of oversight with respect to a corporation’s legal compliance. The court, at the pleading stage, declined to dismiss claims against the directors of the company operating a bank for oversight failures relating to the bank’s compliance with regulations governing overdraft checking practices. Notably, the court viewed a whistleblower complaint as a “red flag for Caremark purposes”; viewed the board’s “delay” in responding to the red flag as possibly constituting bad faith; and, implicitly, viewed the payment of regulatory fines as rising to the level of a “corporate trauma.” Previously, generally, the court has held that whistleblower complaints are not red flags for Caremark purposes as they do not establish that wrongdoing occurred; that it is only “consciously ignoring” a red flag that is problematic, with the timing and substance of a response being in the board’s discretion; and that life, health and safety issues, or truly extraordinary financial or reputational consequences that threaten a company’s continued existence, are the kinds of problems that constitute a corporate trauma sufficient to create liability under Caremark.

Importantly, the court generally has let Caremark claims survive only where it views the overall factual context as egregious or extreme. The distinguishing factor in Brewer appears to have been that, in the court’s view, the board, after apparently being on notice of possibly illegal practices, may have purposefully continued the illegal practices (for eighteen months), not wanting to end them until the company had developed a plan to replace the profits that would be lost when the practices were ended. Also, the whistleblower complaint came from a former executive whose job included legal compliance oversight, and his whistleblower complaint was specific and detailed with respect to the alleged legal violations.

Brewer underscores the importance of board-level attention to legal compliance matters, and ensuring that addressing legal noncompliance is not delayed while a plan is developed to replace profits.

Controllers

The Delaware Supreme Court, in In re The Trade Desk (Nov. 6, 2025), affirmed the Court of Chancery’s dismissal of a shareholder derivative suit challenging the board-approved $5.2 billion incentive compensation package awarded to Trade Desk’s CEO-founder-controller, Jeff Green. (Trade Desk’s market capitalization is almost $19 billion.) The lower court had reasoned, and the Supreme Court agreed, that allegations of Green’s outsized influence at the company were insufficient to establish demand futility absent particularized allegations that Green’s influence was so pervasive as to render a majority of the directors incapable of exercising independent judgment with respect to a shareholder demand to bring the litigation. The lower court had found insufficient the plaintiffs’ contentions that the directors were beholden to Green based on professional, financial, or personal relationships; that Green’s attending Compensation Committee meetings exerted undue influence on the directors’ process; and that the minutes of the committee meetings reflected a lack of negotiation over the compensation package.

The Trade Desk decisions, and the Court of Chancery’s decision on Elon Musk’s compensation (discussed below), underscore that, for companies with a founder or executive with a significant equity stake and/or significant influence, it is important that the board establishes a record of the independent judgment the directors brought to bear when considering acts or transactions potentially affecting such person. Of course, the New DGCL Amendments should limit claims of control with respect to a stockholder owning less than 33% of the company’s shares (see “DGCL Amendments” below).

Corwin

In Activision II (Oct. 2, 2025), the Court of Chancery—not having squarely addressed this issue previously, as far as we are aware—held that Corwin cleansing of fiduciary breaches is unavailable where the stockholder approval of the transaction at issue may not have strictly complied with statutory requirements for such approval. Notably, the 2024 amendments to the DGCL (the so-called “Market Practice Amendments”) make noncompliance with statutory requirements for stockholder approval less likely—but Activision II establishes that one of the consequences of a failure of strict compliance may be the unavailability of Corwin cleansing for any fiduciary breaches.

DGCL Amendments

The New DGCL Amendments, set forth in Delaware SB 21, were enacted to provide greater clarity and predictability under Delaware law in certain areas, with a view to trying to stem the “DExit” movement. The key Amendments apply both prospectively and retrospectively, other than with respect to litigation (or books and records demands) already completed or pending on or before February 17, 2025. The Amendments:

• provide safe harbors (i.e., business judgement review rather than entire fairness review) for conflicted-board and conflicted-controller transactions where an independent special committee approved the transaction—without need for minority stockholder approval as well (although, for going-private transactions, both approvals are still required); and the Amendments make it easier to obtain the approval(s) than is the case under the MFW doctrine;
• codify a definition of independence of directors that tracks existing common law, but adds a “heightened presumption” of independence if the board determined, in good faith and without gross negligence, that, under applicable stock exchange rules, the director was independent from the corporation and (if applicable) the controller;
• define a “controlling stockholder” to mean a person that, together with its affiliates and associates, is a majority stockholder, has a right to elect a majority of the board, or is at least a 33% stockholder and has the functional equivalent of power to elect a majority of the board and exercise managerial control; and
• require greater particularity by a stockholder when describing the purpose for a demand to inspect corporate books and records, and restrict the type of books and records that stockholders can inspect.

The Delaware courts have not yet issued any significant decisions interpreting the Amendments, pending resolution of a challenge to the constitutionality of the Amendments being heard by the Delaware Supreme Court. Oral argument in the case, Rutledge v. Clearway Energy, was heard on November 5, 2025. A decision is expected in early 2026. Generally, the expectation has been that the Supreme Court will find that the Amendments are constitutional.

DExit

Few reincorporations. There continues to be much discussion in boardrooms and beyond about Delaware corporations reincorporating to other states, such as Texas and Nevada, where there are (at least arguably) lower fiduciary standards imposed on controllers and directors and franchise fees are lower. But very few companies have actually left Delaware. Those that have left almost exclusively have been controlled companies (or companies with highly concentrated ownership), and most of these have been in the technology (or other “disrupter”- or “innovation”-type) space. Since the beginning of February 2025, when the New DGCL Amendments were proposed, only 18 Delaware public corporations (four of which are controlled by the Dolan family and one by the Trump family) have reincorporated to other states—12 to Nevada; 3 to Texas; and 1 each to Florida, Indiana, and the Cayman Islands.

The DExit movement started in 2024, with Elon Musk, a vocal proponent, reincorporating Tesla and SpaceX to Texas, after the Court of Chancery struck down the $56 billion shareholder-approved incentive compensation package awarded to Musk, on the basis that he had unduly influenced the board’s process. Also in 2024, ad-tech firm Trade Desk reincorporated to Texas, citing the cost and disruption to the company from litigation in Delaware that challenged a multi-billion dollar incentive compensation package awarded to its CEO-cofounder, Jeff Green. In 2025, private companies Andreesen Horowitz (the world’s largest venture capital firm) and Pershing Square Capital Management (a large hedge fund manager) reincorporated from Delaware to Nevada—with Andreesen Horowitz publicly urging other VC firms and their portfolio companies to follow suit, and Pershing Square claiming that “top law firms” were recommending reincorporation from Delaware.

It remains to be seen to what extent DExit may expand or die off. Relevant factors will include how the Delaware courts interpret and apply the New DGCL Amendments; how other states’ corporate laws are further developed and interpreted; and what the capital markets effects are for companies incorporating outside Delaware. We expect to see controlled companies continuing to consider DExit, particularly where they conceive that they may at some point want the flexibility to take aggressive or controversial acts that may personally benefit the controller, such as a going-private transaction, an outsized compensation package for a CEO-controller, or an investment in the controller’s other companies.

Tripadvisor reversal. The Delaware Supreme Court’s decision in Maffei v. Palkon (Feb. 4, 2025) (“Tripadvisor”) facilitated reincorporations from Delaware. The Supreme Court, reversing the Court of Chancery, held that entire fairness review will not apply to a reincorporation from Delaware to a state with lower fiduciary standards—unless the benefit of the lower fiduciary standards is “imminent” in light of a transaction already effected or intended by the corporation, rather than being merely a hypothetical, future benefit. Thus, a board’s decision to reincorporate should not be subject to entire fairness if made on a clear day.

Musk’s compensation. Tesla, Inc. reincorporated to Texas in June 2024 after the Court of Chancery struck down the $56 billion incentive compensation package granted to Elon Musk, which was approved by the purportedly independent board and approved twice by Tesla’s unaffiliated stockholders. The Court of Chancery held that the compensation package—the largest ever granted in the history of U.S. public markets—was unenforceable due to Musk’s influence over the board’s process in determining the compensation. Tesla appealed, and the case is still pending in the Delaware Supreme Court. After Tesla reincorporated to Texas, the company awarded Musk a $29 billion “interim” compensation package, consisting of restricted stock, to serve as an alternative to the $56 billion package if the Supreme Court does not overturn the Court of Chancery decision. In addition, Tesla’s board  awarded Musk, and in November 2025 Tesla’s  shareholders approved, an additional $1 trillion incentive compensation package. To earn the full $1 trillion, Musk must increase Tesla’s $1.33 trillion market capitalization to $8.5 trillion by 2035, sell 12 million vehicles per year, and deploy one million robotaxis and one million humanoid robots. If he meets the targets, he would become the world’s first trillionaire. The trillion-dollar compensation package has not been legally challenged; and, if challenged, the case would be heard in a Texas business court and subject to Texas law.

Changes to Texas corporate statute. In May 2025, Texas enacted laws (Texas SB 29 and SB 1057) that provide that neither a corporation nor its shareholders have a cause of action against a director or officer unless the claimant rebuts a presumption of good faith by the director or officer and alleges with particularity a breach of duty involving fraud, intentional misconduct, an ultra vires act, or a knowing violation of law. Also, corporations can adopt bylaws imposing an ownership threshold for shareholders to bring a derivative suit (which can be up to 3% of the outstanding shares). Further, amplifying the intention to distinguish Texas law from Delaware law, SB 29 states: “The managerial officials [of a Texas corporation] may consider the laws and judicial decisions of other states…[but] the failure or refusal…to conform to the laws, judicial decisions, or practices of another state does not constitute or imply a breach.”

Entire Fairness

New DGCL Amendments. The new safe harbors established by the New DGCL Amendments will reduce the circumstances under which entire fairness will be applied in conflicted transactions. See “DGCL Amendments” above.

General trend. There continues to be a general trend indicating that entire fairness, when applicable, is no longer as consistently outcome-determinative in the plaintiff’s favor as in the past. There have been numerous decisions in the past few years in which the Delaware courts, when applying entire fairness, have found that the standard was in fact satisfied (i.e., found that the price and process were fair).

Further, we would note that, in an important, three-page footnote in Ban v. Manheim (May 19, 2025), Vice Chancellor Laster, in expressing his personal disagreement with the Delaware Supreme Court’s decision in Tripadvisor, suggested that the Supreme Court’s “imminence test” imposed in that decision logically would be applicable not only in the context of a lessening of shareholders’ “litigation rights” (the issue in Tripadvisor) but also in the context of a lessening of other shareholder rights. If so, seemingly, entire fairness would not apply when a conflicted action reduces stockholders’ governance or other rights but the actual impact has not yet occurred nor is imminent. Also of note, Vice Chancellor Lori W. Will, in Roofers Local v. Fidelity National Financial (May 9, 2025), applied entire fairness review but dismissed the case at the pleading stage, before any discovery, emphasizing a lack of indicia of unfairness as to the conflicted transaction at issue. The Vice Chancellor stressed that a conflicted transaction, even if it does not meet safe harbor requirements, does not give plaintiffs “a free pass to trial.”

Unpredictability of results. Roofers, and another decision in which the Court of Chancery applied entire fairness, Wei v. Levenson (June 3, 2025) (“Zoox”), illustrate the unpredictability of results under the entire fairness standard. They also highlight that, for transactions as to which the New DGCL Amendments are applicable (which was not the case for these transactions), the route to business judgment review (and thus a dismissal of claims) will be easier than has been the case under MFW.

In Roofers, the court dismissed the case at the pleading stage on the basis that, although there were process flaws, the price appeared to be fair; while in Zoox, the court rejected dismissal of the case at the pleading stage even though the transaction apparently delivered more value than any other transaction proposed to the board could have. The different results flowed from the specific facts and circumstances of the two cases. Roofers involved a transaction with a conflicted controller—but the transaction was approved by two concededly independent directors, and the process was apparently pristine other than for a question about fairness based on the timing of the parties’ announcement of the transaction. The independent special committee was fully authorized, functioned well, and was focused on ensuring that the transaction would be on terms at least equivalent to “a public market deal.” Zoox involved a sale to a third-party buyer following a process with multiple bidders, none of whose proposals provided as much value to the common stockholders—but the transaction was approved by a majority-conflicted board. There was no “distance” between the interested Preferred Stock holders and the directors they had appointed; the officer-directors were promised material non-ratable personal financial benefits; and the officer-directors had spoken of “forc[ing]” the deal on the stockholders.

If the New DGCL Amendments had been effective, the transactions in both of these cases readily could have met the requirements for safe harbor protection under the Amendments—and both cases would have been dismissed at the pleading stage without regard to fairness of the price or process. Notably, in Zoox, although one of the members of the three-person special committee became non-independent during the process, under the New DGCL Amendments (unlike MFW) that would not have defeated the safe harbor protection so long as the board’s initial determination of independence was made in good faith and without gross negligence, and a majority of the remaining committee members approved the transaction.

Extension of Merger Agreements

The Court of Chancery’s decision in Activision II (Oct. 2, 2025) underscores that, generally, a target company’s decision to agree to extend a merger agreement past its termination date should be made with the same rigor as is required for an initial decision to enter into a merger agreement. In Activision II, the Court of Chancery, in a pleading-stage decision, found it reasonably conceivable that Activision Blizzard’s decision to extend its merger agreement with Microsoft was infected by the same fiduciary breaches that had related to its initial decision to approve the merge agreement—namely, a failure of board oversight of the sale process that was being led by a potentially conflicted CEO. Although the court assumed for purposes of the opinion that the full board was independent and disinterested, and although the merger agreement was approved by the stockholders, the court held that Corwin cleansing was unavailable for any fiduciary breaches, as the stockholders had not separately voted to approve extending the merger agreement.

Fraud

In Edwards v. GigaAcquistions2, LLC (July 25, 2025), the Court of Chancery, at the pleading stage, dismissed claims by a company (the “Company”) that was joining with others in a de-SPAC combination that it had been fraudulently induced to join the combination. The Company had received during due diligence—from the Portfolio Companies, their financial advisor, and the SPAC sponsor—oral assurances and management presentations indicating that the Portfolio Companies were financially sound and positioned for success. Post-closing, the combined company went bankrupt, and the Company discovered that information it had received in the due diligence process was false. The court refused to toll the statute of limitations for fraud, which had lapsed just before the suit was filed. The court stressed that the company could have conducted more expansive due diligence (specifically, the court wrote, the Company could have “request[ed] additional information”) rather than relying on the oral statements and management presentations provided to it. The court also stressed that the persons providing the due diligence information were acting on behalf of the Company’s counterparties on the other side of the negotiating table and thus had no duty to the Company. The court rejected the plaintiffs’ argument that, as the Portfolio Companies were privately held, the information about them was entirely in the defendants’ hands and therefore undiscoverable.

The decision highlights a fundamental due diligence dilemma—it is usually the case, particularly in the context of private companies, that due diligence information is provided by persons who are acting on behalf of one’s counterparties; and even if “additional information” is requested, such persons, if acting fraudulently, may simply provide more false information. The decision underscores that due diligence should not be a passive process. Information that is received should not be blindly accepted as accurate; follow-up questions should be asked; backup data should be requested; utilizing one’s own advisors and

experts to doublecheck certain information should be considered; and a record of the information sought (and obtained) should be maintained. Where the company is private, there is a heightened challenge to verify information that is provided, particularly if the seller is not well-known to the buyer and/or does not have a significant reputation or track record. Buyers should understand that a due diligence process, even if robust, cannot provide certainty. For any information that is especially important, uncertain, suspect, or easy to manipulate, a buyer should consider whether it can obtain protection by negotiating for specific representations and warranties in the parties’ written agreement.

In Erste Asset Management v. Bernardo Hees (June 9, 2025), the Delaware Supreme Court reversed the Court of Chancery’s dismissal of a motion brought by a Heinz Kraft stockholder to reopen a dismissed derivative suit. The Supreme Court held that Heinz Kraft’s misrepresentations about a director’s consulting arrangements with the company constituted fraud, warranting relief from judgment under Superior Court Civil Procedure Rule 60(b)(3). Rule 60 (b) provides that the court may relieve a party from a final judgment for certain specified reasons, one of which is an adverse party’s fraud. The Court of Chancery had dismissed the suit, which alleged breaches of fiduciary duties in connection with a stock sale of Heinz Kraft shares, on the basis that a majority of the board approving the sale had been disinterested. One of the directors had been a compensation consultant for the company, reporting to the CEO, but the company’s public filings and litigation representations indicated that the arrangement had terminated before the relevant date for assessing demand futility. Through a books and records demand, the plaintiff had learned that the arrangement in fact had continued beyond that time. The plaintiff filed a Rule 60(b) motion for relief from the judgment on the basis of fraud and newly discovered evidence. The Court of Chancery rejected the motion, reasoning, first, that the plaintiff could have discovered the information earlier through reasonable diligence, and, second, that Rule 60(b) is available only where there is a fraud on the court. The Supreme Court held, however, that Rule 60(b) is also available where there is fraud between the parties, including false information in public disclosures or court filings, that prevent a fair presentation of the case to the court.

Hell-or-High-Water Efforts Obligation

In Desktop Metal v. Nano Dimension (Mar. 24, 2025), the Court of Chancery found that a buyer failed to meet its contractual obligation to “take all actions necessary” to obtain approval of the acquisition from the Committee on Foreign Investment in the U.S. (CFIUS). The buyer was objecting to terms CFIUS was seeking in a National Security Agreement. The merger agreement provided for specific performance as the remedy for breaches. On that basis, the court ordered that the buyer, within 48 hours, agree to and execute the NSA in the form proposed by CFIUS.

Notably, the context was somewhat unusual. During the negotiations with CFIUS, an activist investor who had long opposed the merger (believing that the buyer should wait and acquire the financially distressed target out of bankruptcy) commenced a proxy contest and took control of the target company’s board. The buyer then, allegedly, delayed its responses to CFIUS’s comments on the draft NSA; stopped engaging productively with CFIUS; and introduced new, material terms as prerequisites to accepting the NSA. The buyer contended that CFIUS was requiring actions that the buyer was not required to agree to under the hell-or-high-water efforts clause, as there was a carveout for actions that would involve relinquishment of control of any portion of the target’s business that accounted for 10% or more of its revenue. The court held that CFIUS’s requests did not fall within the carveout and the buyer was required to agree to them.

The decision underscores the need for careful consideration and drafting of provisions setting forth hell-or-high-water or best efforts obligations to obtain regulatory approvals. In this case, the buyer stressed that it had agreed to the hell-or-high-water obligation with respect to CFIUS in return for a lower reverse termination fee it would have to pay if CFIUS approval were not obtained. The allocation of risk between parties relating to regulatory approvals (including the disadvantages of trading off a higher efforts obligation for a lower reverse termination fee) should be carefully considered by a buyer. This may be especially important in the context of CFIUS—where the parameters for approval may be more uncertain and wide-ranging given the nature of national security concerns, and where the mitigation requirements usually are proposed by CFIUS rather than the parties. (We note also that buyers should consider the potential advantages of proactively proposing mitigation remedies to CFIUS.)

Indemnification

Notice requirements. In Thompson Street Capital Partners IV v. Sonova U.S. Hearing Instruments (Apr. 25, 2025), the Delaware Supreme Court overturned the Court of Chancery’s decision that a post-closing  indemnification claim notice met the timing and specificity requirements set forth in the parties’ merger agreement. The Supreme Court held that it was reasonably conceivable that the notice did not meet the requirements, and that the buyer therefore may have forfeited its right to indemnification. The Supreme Court remanded the case for further fact-finding relating to whether the timing and specificity requirements were material to the agreement and, if so, whether the noncompliance would result in a “disproportionate” forfeiture.

The decision serves as a reminder that non-compliance with contractual requirements for an indemnification claim notice may or may not result in forfeiture of the indemnification right, depending on the specific agreement language and the specific circumstances. The Supreme Court found in this case that the noncompliance could potentially lead to forfeiture of the indemnification right because the merger agreement specifically and clearly stated that the buyer would have no right to indemnification unless it provided notice of an indemnification claim pursuant to the provisions set forth in the agreement. Further, however, the court stated that noncompliance with the notice requirements would lead to forfeiture only if the notice requirements were material to the parties’ agreement and would not cause a “disproportionate” forfeiture. Those factual issues precluded judicial determination at the pleading stage and necessitated a trial, the Supreme Court held.

Accordingly, sellers, to bolster their ability to enforce indemnification claim notice requirements, should consider negotiating to include provisions stating that: noncompliance with the notice requirements will result in forfeiture of the indemnification right; the notice requirements are a material part of the agreement; and forfeiture of the indemnification right due to noncompliance with the notice requirements will not cause a “disproportionate forfeiture” excusing the noncompliance. Buyers should consider negotiating for provisions to the contrary, and should seek to ensure that the drafting provides sufficient flexibility in the event the buyer lacks sufficient information by the notice deadline to include the required details with respect to the claim. More generally, the parties should ensure compliance with deadlines and other requirements set forth in their agreement for making indemnification claims.

Scope. In LGM Holdings v. Schurder (Apr. 22, 2025), the Delaware Supreme Court, reversing a Delaware Superior Court decision, held that a letter agreement relating to the scope of indemnification was ambiguous. Sellers of a pharmaceutical business had represented material compliance with law, but, post-closing, the FDA and DOJ commenced an investigation into legal noncompliance, including alleged fraudulent pre-closing conduct. The sellers and buyers then entered into an indemnity agreement that included a $6 million cap on indemnification with respect to this issue. The buyers later sued for $6 million of indemnification, plus $35 million for fraudulent inducement on the basis that they would not have entered into the sale agreement if they had known about the sellers’ alleged pre-closing fraudulent conduct. The trial court, at the pleading stage, had agreed with the sellers that the $6 million cap applied to all claims, including the fraudulent inducement claim. The Supreme Court, however, found that both the buyers’ and the sellers’ respective interpretations of the indemnification agreement were reasonable. The buyers’ interpretation was that the cap applied only to post-closing conduct and the fraudulent-inducement claim arose from pre-closing conduct. The sellers’ interpretation was that that the cap provided a maximum amount for recovery, which the buyers could not circumvent by disguising an indemnification claim as a separate action for fraud. The Supreme Court remanded the case, permitting discovery to proceed to resolve the ambiguity as to the scope of the indemnification agreement the parties intended.

Damages. In Dura Medic Holdings, Inc. Consol. Litig. (Feb. 20, 2025), the buyers of a company discovered post-closing that the sellers had breached their representations related to the company’s client contracts and legal compliance. The buyers delivered an indemnification notice seeking over $16.5 million and then sued. The merger agreement expressly permitted damages based on “a multiple of earnings, revenue or other metric.” The court stressed that the merger agreement did not require basing damages based on a multiple, and that it did not state when using multiples would be appropriate (such as by linking them to specific representations). The court decided that applying a multiple would be appropriate, however, as, first, the loss of key contracts resulted in “recurring declines in revenue” and, also, the buyer had determined the price for the business with a market approach using a multiple of revenue. Based on Dura Medic, parties should consider specifying in their agreement whether damages must (or can) be calculated based on a multiple; and, if so, under what circumstances and using what multiple.

Sandbagging. In Dura Medic, the Court of Chancery also held that a buyer’s pre-closing knowledge of the inaccuracy of a representation and warranty in the parties’ agreement did not prevent the buyer from bringing a post-closing indemnification claim for breach of the representation and warranty.  The court emphasized that representations and warranties are a tool for allocating risk between the parties and that a breach claim (unlike a fraud claim) does not require a showing of justifiable reliance. By providing a representation and warranty, a seller agrees to assume the risk that the facts represented are or may become incorrect, regardless of the foreknowledge of either the buyer or the seller. Further, the court observed that a standard integration clause in the agreement would prevent information outside the four corners of the agreement from operating to modify the agreement. Therefore, in this case, the court stated, even if the sellers had disclosed additional governmental notices in the due diligence process but not in the transaction documents, such disclosures would not have modified the representations and warranties.

LLC Agreements

In Khan v. Warburg Pincus, LLC (Apr. 30, 2025), the Court of Chancery held that the LLC operating agreement at issue precluded the plaintiff’s contractual claim—as the agreement expressly waived fiduciary duties and expressly permitted the defendants to act in their own interests so long as they were acting in compliance with the LLC agreement. The court concluded that the claim exceeded the reach of the implied covenant of good faith and fair dealing, as there was “no gap to be filled” because the parties had addressed the very matters at issue—namely, the ability to amend rights of the minority stockholders and terminate their tag-along rights to allow disparate consideration to be paid to them in a merger, if a majority of the affected class of stockholders approved those actions (which they had). To the plaintiff’s contention that the disclosure provided to the minority stockholders was inadequate and thus rendered their vote invalid, the court responded that there was “no free-floating obligation of disclosure.”—and that, if a certain level of disclosure was to be required, the LLC agreement should have stated so

The decision highlights, again, that a waiver of fiduciary duties in an LLC agreement generally will be enforceable and any exceptions to a waiver (including with respect to disclosure) must be expressly set forth in the agreement. Like many previous decisions, Khan underscores the importance for investors in an LLC to understand the limitations of their rights under the LLC agreement and the vastly different legal structure that applies than in the corporate context.

Limited Partnership Agreements

In Walker v. FRP Investors GP, LLC (Apr. 15, 2025), the Court of Chancery, in a post-trial opinion, held that the general partner of a limited partnership breached its obligations under the Limited Partnership Agreement with respect to determining the “Threshold Value” of newly issued incentive units (“B Units”) of the partnership. The plaintiff, who did not receive any of the newly issued B Units, and whose existing stake thus was diluted by the new issuance, claimed that, as a result of the general partner’s breach, the Threshold Value for the newly issued units was set too low, which exacerbated the dilution of his existing stake. The court concluded that, notwithstanding the broad authority granted to the general partner in the LPA, including to issue and value partnership units, the general partner did not have discretion to rely on the company’s last regularly prepared valuation to determine the newly issued units’ Threshold Value. The court awarded the plaintiff damages for the increased dilution that resulted from the general partner setting the Threshold Value too low.

Importantly, in interpreting the LPA’s immediacy requirement with respect to the valuation, the court was influenced by the LPA’s standard “profits interests” provision—although this provision generally is included in LPAs for tax purposes only and practitioners generally would not have thought it would limit a general partner’s discretion with respect to an immediacy requirement when determining the value of newly issued units. General partners should consider expressly stating that any parameters, procedures or requirements with respect to valuation of incentive units that are set forth in the LPA are set forth solely for purposes of seeking to ensure that the units will constitute “profits interests” for U.S. federal and applicable state tax purposes, and that they will not in any way affect the interpretation of any other provision of the agreement nor imply that the general partner has any duty to any partner to determine any particular threshold value or to mitigate in any way any dilution from the issuance of new units.

In addition, general partners should consider stating that the partnership and the general partner will have no responsibility for any adverse tax consequences to any management partner as a result of any taxing authority’s challenge to the determination of threshold value of incentive units; that there is no limit on the number of new incentive units that can be issued by the partnership under the agreement, and no partner can make a claim and bring a cause of action against the partnership or the general partner based on any dilution arising from such issuance; and, if appropriate, that the general partner, when determining threshold value, can take into account such interests and factors as it chooses in its sole discretion, and can, but is not required to, rely entirely or to any extent it chooses on the most recent quarterly (or other) valuation of the partnership.

Non-competes

The FTC has stated that anticompetitive employment non-compete agreements will be vigorously challenged—albeit through a different approach than the previous administration took. In September 2025, the FTC moved to dismiss pending appeals in two lawsuits challenging the broad non-compete rule, promulgated under the previous administration, that banned most employment non-competes. This move effectively ends the possibility of the non-compete rule taking effect. Instead, the FTC has adopted a case-by-case approach, targeting specific instances where restrictions are overly broad. As part of this effort, the FTC sent warning letters to several large healthcare employers and staffing firms encouraging them to review employment agreements to ensure non-competes and agreements restricting employee mobility are appropriately tailored. In addition, the FTC filed a complaint and a proposed consent order against Gateway Services (a pet cremation provider), alleging that Gateway imposed overly broad non-compete agreements on 1,780 employees, regardless of role. The proposed consent order would prohibit the company from entering into or enforcing most non-compete agreements and limits the scope of non-solicitation of customer provisions in the company’s employment contracts. Accordingly, employers should expect continued scrutiny of worker mobility restrictions and consult with counsel to ensure that any contemplated non-competes—particularly in the context of M&A transactions (as such agreements are required to be submitted with HSR filings)—are narrowly tailored to protect legitimate business interests.

In HKA Global v. Beirise (Dec. 16, 2025), the Court of Chancery found a non-compete provision to be overbroad, as it applied to every entity in the company’s corporate structure; and found a non-solicitation provision to be overbroad, as it prohibited “encouraging” other employees from leaving the company. Notably, HKA Global required that the executive enter into the agreement when HKA Global acquired the company at which the executive was employed, Kenrich Group. But the court found it “a stretch” to consider the agreement as having been entered into in the acquisition context, as the agreement was attached to the executive’s employment agreement and stated that he was entering into it in consideration of his continued employment. Further, the court stated that, in any event, the provisions were unenforceable. The non-compete prohibited the executive, for one year, from employment with any U.S. competitor of the “Group Company,” which was defined to include Kenrich’s direct or indirect parent or subsidiary entities. This definition was “fatally overbroad,” as it included “all or any portion of the business carried out by any entity…in HKA’s corporate structure.” The court noted that HKA is currently owned by “a private equity firm with investments in portfolio companies across sectors in dozens of countries”; and “[b]y its terms, the definition of ‘Group Company’ includes any company that [the PE firm] invests in or acquires.” The agreement “thus purports to bar [the executive] from competing with business lines he never managed, sold, or worked within, simply because those lines are operated by entities broadly affiliated with HKA….” The non-solicitation provision prohibited the executive, for one year, from recruiting, soliciting or encouraging any Group Company employee to leave the employ of any Group Company. The court found this provision to be overbroad both because of the overbreadth of the definition of “Group Company,” and also because “encouraging” an employee could include “advising a colleague to leave HKA for health reasons, to retire, or to care for family,” which “restricts speech and conduct unrelated to unfair competition and advances no legitimate business interest.”

Proxy Voting

Proxy voting practices are becoming increasingly fragmented and diversified, making shareholder vote outcomes less manageable and less predictable. The imperative for companies continues to be understanding the composition of the shareholder base and devising an effective, tailored outreach strategy. Notably, AI and other technology is increasingly being used to organize the proxy process; and social media is increasingly used for outreach.

Asset managers. Certain major passive fund managers have been implementing and expanding a pass-through voting option, allowing more investors to indicate preferences for how their votes will be cast. Also, BlackRock, Vanguard and State Street have been forming internal teams that will take different approaches and implement different policies to align engagement with the investor’s holding style—active, passive, or focused on sustainability. Thus, on the same issue, the asset manager may vote shares differently across funds.

Glass Lewis changes. On October 14, 2025, proxy advisory firm Glass Lewis announced that, beginning in 2027, it will no longer provide proxy voting advice based on a single set of “benchmark” policies. Instead, it will tailor its proxy advice to the particular client, taking into account the client’s “unique investment philosophies and stewardship priorities.” Glass Lewis will take a “multi-perspective approach” to its research and recommendations, which will allow its clients to select the “research lens that best aligns with [its] firm-specific voting policies and strategic objectives.” On November 10, 2025, Glass Lewis sent a letter to clients explaining that the categories it will employ, among which investors can choose, are: Management-Aligned; Governance Fundamentals; Active Ownership; and Sustainability.

Glass Lewis clarified as follows: “A passive institutional investor or a hedge fund with a concentrated portfolio and a strong conviction toward stability and management’s operational capabilities would likely opt for the Management-Aligned perspective and vote in support of the Board’s proposals unless egregious issues are present. A mid cap, U.S. asset manager that subscribes to corporate governance best practices but does not consider most environmental and social issues, including DEI, to be material will likely adopt a custom policy framework that aligns closely with the Governance Fundamentals research perspective and would therefore support proposals that reflect governance best practices but reject DEI and other E&S proposals unless egregious issues are present. A large cap, global asset manager that historically followed the Glass Lewis house policy will likely adopt a custom policy framework that aligns closely with the Active Owner research perspective and would therefore vote according to governance best practices including support for financially material environmental and social matters. A Dutch pension fund with strong convictions toward sustainability in addition to corporate governance might adopt a policy framework that promotes sound sustainability and governance practices and consistently vote in support of them.”

Engagement. The increased fragmentation of proxy voting policies heightens the importance for companies of regular engagement with their major shareholders to understand their views and priorities (keeping in mind the developments discussed below under “Schedule 13G”). Also, with less predictable voting by major shareholders, companies with a significant retail base should formulate plans to understand who these shareholders are and how they can be reached. Of note, ExxonMobil, after receiving a no-action letter from the SEC, introduced an automated voting option that allows its retail investors automatically to cast ballots at annual meetings in line with the board’s recommendations.

Proxy Advisory Firms Regulation

Executive Order. On December 11, 2025, the Administration issued an Executive Order directed at limiting proxy advisory firms’ influence over shaping the policies and practices of public companies, requiring them to issue recommendations more on a case by case basis, emphasizing individual factors (as Glass Lewis and ISS already have done to some extent, in anticipation of the EO). The proxy firms’ recommendations, and thus shareholder vote results, will therefore be less predictable than in the past. The EO, among other things, seeks to eliminate DEI and ESG considerations in voting recommendations; and will increase scrutiny of proxy advisory firms in terms of whether their activities can be construed to violate securities or antitrust laws. As the EO requires the SEC to consider adopting new rules or revising existing rules in response to the EO, these could affect the 2026 proxy season.

SEC. In July 2025, the U.S. Court of Appeals for the D.C. Circuit, concluding that proxy voting advice does not constitute proxy “solicitation” under Section 14 of the Securities Exchange Act of 1934, affirmed a lower court decision vacating certain SEC regulations concerning proxy advice.

Texas. States have been considering regulation of proxy advisory firms. In June 2025, Texas passed a bill requiring proxy advisory firms to disclose when their voting recommendations to companies incorporated or headquartered in Texas are based in part on “nonfinancial” factors, including ESG or DEI considerations. ISS and Glass Lewis have challenged the legal validity of the bill, and a federal judge has issued preliminary injunctions blocking enforcement pending resolution of the challenges. Trial has been set for February 2026. Similar initiatives are being pursued or considered in other states. Such laws would raise significant issues, including potential legal liability for companies receiving proxy advice that states that it may not be in the financial interest of their equity investors.

Purchase Price Adjustments

In Northern Data v. Riot Platforms (June 2, 2025), the Court of Chancery addressed typical purchase price adjustment (PPA) and indemnification provisions set forth in a stock purchase agreement. The agreement provided that the PPA be made pursuant to GAAP applied consistently with the target company’s past practices; that indemnification was the exclusive remedy for breaches of the target company’s representations and warranties; and that PPA disputes would be resolved by an independent accounting expert, whose determinations would be final and binding on the parties. The court interpreted the GAAP provision as requiring, as a threshold matter, that GAAP principles be utilized—and, if the company’s historical practices did not comply with GAAP, then the GAAP-compliant principle that most closely aligned with the  historical practice should be utilized. In this case, the court determined that there was only one GAAP-compliant approach and, therefore, it should be applied even if inconsistent with the historical practices and the illustrative closing statement. Finding no manifest error by the expert (the standard set forth in the parties’ agreement), the court deferred to the expert’s calculation based on the GAAP-compliant approach.

In addition, the court found that two disputed items were indemnification issues to be resolved by the court, rather than accounting issues to be resolved by the expert. One issue was whether alleged pre-closing double-billing of a customer was properly included in accounts receivable; the other was whether a pre-closing invoice for electricity charges had been paid and so would be not be included in accounts payable. Resolution of these issues required an interpretation of the Agreement, the court stated, which was a legal issue, subject to de novo review by the court with no deference to the expert’s determinations. The court concluded that, as both disputed items directly implicated the seller’s representations and warranties set forth in the Agreement, and the Agreement provided that indemnification was the exclusive remedy for breaches of representations and warranties, the dispute over these items was subject to the indemnification provisions, including the indemnification cap.

The decision highlights the need for precise drafting of PPA and dispute resolution mechanisms, including with respect to: whether an expert is acting as an expert or an arbitrator; the scope of the expert’s authority; how the PPA and dispute resolution mechanisms interface with the indemnification provisions; and what “GAAP consistently applied” means if the company’s historic practice at issue was not GAAP-compliant.

Revlon

In In re Dura Medic Holdings (Feb. 20, 2025), the Court of Chancery confirmed that Revlon enhanced scrutiny review will apply to an asset sale that is a final-stage transaction for all shareholders. The court rejected the defendants’ contention that business judgment review applied to the asset sale; and also rejected the plaintiffs’ contention that entire fairness review applied (as there were no allegations that  the defendants stood on both sides of the transaction, received a non-ratable benefit, or avoided a unique detriment). The court rejected the plaintiffs’ argument that the defendants—the private equity firm that owned the company, and the company’s CEO and directors, who were partners of the PE firm—had breached their fiduciary duties by pursuing a sale instead of securing additional financing to enable the company to continue as a standalone entity. The court noted that the defendants had previously provided the company with substantial financing, did not use their control to force the company into a vulnerable position, and had no obligation to provide additional funding. The court found that the sale fell within a range of reasonableness as required under Revlon.

SPACs

Resurgence. There has been a resurgence in the use of special purpose acquisition companies (SPACs) in 2025—with roughly 100 SPAC IPOs through Q3, accounting for more than a third of new U.S. IPOs, roughly triple the number of SPAC IPOs and amounts raised in the same period last year. The use of SPACs boomed during the pandemic, a period during which they featured speculative fervor, celebrity endorsements, managers without SPAC experience, and disappointing results from deSPAC mergers. The new comeback, spurred in part by pent-up capital in the private markets, appears to have a more measured, sober tone—led by managers with SPAC track records, more emphasis on higher-quality deSPAC deals, and targeting of next-generation technologies.

Class for Multiplan settlement. In In re TS Innovation Acquisitions Sponsor, LLC Stockholder Litig. (July 9, 2025), the Court of Chancery, in a letter decision, narrowed the class for settlement of a Multiplan claim (i.e., a claim that redemption rights held by public stockholders of a SPAC were impaired). The proposed class was defined as persons who held shares between the Record Date and the Closing Date and their successors in interest. The court expressed skepticism that Multiplan claims “traveled with the shares post-closing since the redemption rights at issue terminated [on closing of the deSPAC merger].” After supplemental briefing on the issue, the court agreed with the plaintiffs that “successors in interest” should be limited to those persons or entities who acquired shares before the merger closed—that is, “successors in interest” should exclude “post-[m]erger shareholders, who never had redemption rights, because they are not successors in interest to the claims.” The court wrote: “As a result, successors in interest should only include those upon whom the claims devolve by operation of law”—meaning that “the shareholder acquire[d] the shares without any act or cooperation on his or her part.” Thus, for example, an heir who obtained a decedent’s shares through a will or intestate succession would be a successor in interest to MultiPlan claims, but a person who received shares through a voluntary transaction, such as a sale or gift of stock, would not be. The court ordered that the class be redefined to modify “successors in interest” by adding “who obtained shares by operation of law.”

Schedule 13G

On February 11, 2025, the SEC Staff issued guidance that narrowed the scope of activities in which an investor filing on Schedule 13G can engage with management without losing its “passive” status under Sections 13(d) and (g) of the Securities Exchange Act of 1934. The guidance indicates that a Schedule 13G filer can share its views and voting policies with management, but cannot condition its support for a director nominee or a proposal on the company supporting or implementing the investor’s views. As a result of this guidance, Schedule 13G investors have become more focused on how to frame their engagement with portfolio companies.

At a conference in May 2025, the Acting SEC Chair encouraged investors not to interpret the Schedule 13G  guidance as requiring them to be overly guarded in discussions with management. He stressed that Schedule 13G eligibility is premised on not “influencing” control of the company. “By requiring that a shareholder needs to ‘exert pressure on management [to lose 13G eligibility],’ the [new guidance] indicates that there needs to be something more than the mere planting of an idea with management in order to lose Schedule 13G eligibility,” he stated. In his view, he said, the wording of the new guidance thus actually broadens the scope of permissible activities in which investors can engage while still remaining Schedule 13G-eligible.

Shareholder Proposals

Broader exclusions. SEC guidance issued in February 2025 (SLB 14M) expanded availability of the “economic relevance” and “ordinary business” bases for excluding shareholder proposals. In the 2025 proxy season, there was a significant increase in requests by companies for no-action relief from the SEC, and, although the response in each case was highly dependent on the specific facts and circumstances involved, the vast majority of the requests were granted. Companies had greater success than in the past asserting exclusion of proposals on the basis that the proposal was already substantially implemented, lacked economic relevance, or was false and misleading. Of note in particular, in several cases, the SEC Staff, reverting to a prior Staff approach, took the position that a corporation’s replacing a supermajority vote requirement in the charter or bylaws with a vote requirement based on a majority of the shares outstanding constitutes substantial implementation of a proposal that seeks to replace a supermajority vote requirement with a requirement based on a majority of the shares cast.

Possible elimination of precatory proposals. Recent public commentary by SEC officials (including the Chairman, in remarks made in October 2025) indicate that the SEC may view precatory (i.e., non-binding) shareholder proposals as not constituting “proper business” for an annual meeting under Delaware law—at least with respect to environmental and sustainability proposals (and, potentially, also other proposals), where a company has not established its own standards for precatory proposals in its charter or bylaws. In response, some companies have been considering adopting bylaws addressing the issue, and some may seek to exclude precatory shareholder proposals from their proxy statements (on the basis that they are excludable under Rule 14a-8(i)). The issue whether state law may provide shareholders a right to bring precatory proposals has not yet been tested in court.

Executive Order. On December 11, 2025, the SEC issued an Executive Order directing the SEC to review and, if appropriate, rescind or revise all rules and regulations relating to proxy advisory firms (see above) and shareholder proposals that implicate DEI and ESG priorities that are inconsistent with the purpose of the EO.

Link to the full article can be found here.