Shareholder Primacy Another controller lawsuit; proxy advisors and exec comp
13 snips
Mar 11, 2026 Discussion of a liquidity-driven take‑private of EngageSmart and alleged bidder favoritism and disclosure gaps. Exploration of legal standards governing deal cleansing and potential aiding and abetting claims against banks. Examination of pressure on proxy advisors over ESG, director recommendations, contests, and executive pay benchmarking.
AI Snips
Chapters
Transcript
Episode notes
Controller Liquidity Deals Can Skew Bidding
- Take-private deals by controlling shareholders can be structured to give the controller liquidity while retaining control, narrowing buyer competition.
- EngageSmart showed General Atlantic sought cash while vetoing control bids, steering process to favored buyer Vista and limiting market testing.
Incomplete Proxy Disclosures Defeat MFW Cleansing
- Under MFW cleansing, both independent board approval and informed disinterested shareholder approval are required to avoid entire-fairness review.
- Vice Chancellor Laster found EngageSmart's proxy disclosures lacked material process and conflict details, making the shareholder vote uninformed.
Adviser Conduct Can Support Aiding And Abetting Claims
- Courts treat alleged aiding-and-abetting differently when the defendant is the target's financial advisor than when it's the acquirer.
- Laster found plausible claims that Goldman, as advisor, impeded Evercore and favored Vista, supporting an aiding-and-abetting theory.