Study: Big M&A Deals Virtually Certain To Draw Lawsuits

For the fourth consecutive year, shareholder lawsuits were filed in more than 90 percent of merger and acquisition deals valued at more than $100 million. In 2013, 94 percent of such deals saw a shareholder challenge, according to a report by Cornerstone Research Inc., up from 44 percent in 2007.  An average of five suits were filed for every deal over $100 million, and an average of nearly seven for deals of $1 billion or more. In 75 percent of the 2013 cases, litigation  was resolved before closing the deal, usually through settlement.

Multi-jurisdictional challenges were common: 62 percent of deals last year were litigated in more than one court. The most active court for M&A litigation was the Delaware Court of Chancery, followed by courts in New York County, N.Y., Santa Clara County, Calif., and Harris County, Texas. The ‘race to file’ trend subsided in 2013, with lawsuits filed on average 11.7 days after the deal announcement, compared to just 6.5 days in 2009.