Going Public Transactions For Smaller Companies: Direct Public Offering And Reverse Merger

Guest Post by Laura Anthony, Esq – Legal & Compliance, LLC

Introduction

One of the largest areas of my firms practice involves going public transactions.  I have written extensively on the various going public methods, including IPO/DPOs and reverse mergers.  The topic never loses relevancy, and those considering a transaction always ask about the differences between, and advantages and disadvantages of, both reverse mergers and direct and initial public offerings.  This blog is an updated new edition of past articles on the topic.

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Can Business Judgment Review Combat Stockholder Litigation Challenging MA Deals?

Guest post by attorneys at Fried, Frank, Harris, Shriver & Jacobson LLP

Abigail Pickering Bomba, Steven Epstein, Arthur Fleischer, Jr., Peter S. Golden, Philip Richter, David N. Shine, John E. Sorkin, and Gail Weinstein

In KKR Financial Holdings LLC Stockholder Litigation (Oct. 14, 2014), the Delaware Chancery Court has continued its march to the drumbeat of business judgment deference.

In a putative class action by shareholders of KKR Financial (KFN), who were claiming breach of fiduciary duty by KFN’s board in having approved a $2.6 billion merger with private equity firm KKR, Chancellor Andre Bouchard found that KKR had not been a controlling stockholder of KFN– because KKR held less than 1% of KFN’s voting power and had no right to appoint or remove directors or block board actions, even though KKR had “total managerial control” of KFN. The Chancellor also found that KFN’s directors had been independent of KKR (even though they had been nominated by and had various ties to KKR); and that KFN’s merger proxy statement had provided for a fully informed stockholder vote. The court applied business judgment review and dismissed the case at the pleading stage.

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