Conflicted M&A Deals at Private Companies: Emerging Issues

Navigating Conflicts of Interest Among Controlling Investors, Boards of Directors, LLPs and Other Shareholders

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, December 19, 2013

Recorded event now available

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Course Materials

This CLE course will discuss emerging issues in conflicted deals at private companies, and conflicts that arise as boards and controlling shareholders attempt to structure deals when stakeholders have different rights, different interests and other extenuating circumstances. The program will discuss recent conflicted deal litigation and lessons for private M&A transactions.


Private M&A deals can present actual or potential conflicts for boards of directors, particularly when the stockholders include private equity firms or venture capital funds, or other controlling or dominant stockholders whose interests might differ from those of other stockholders.

For example, the divergent interests of preferred and common stockholders were at issue in In re Trados Shareholder Litig. Although the court ultimately ruled that the board did not breach its fiduciary duties, the board was held to an entire fairness standard on account of the conflicts inherent in the affiliation of the board members with the venture capital firm that owned preferred shares.

In contrast, the Delaware Chancery Court applied the business judgment rule in a going-private transaction between a controlled company and its controlling shareholder in In re MFW Shareholders Litig. The ruling in SEPTA provided further discussion of the business judgment rule in a sale involving a controlling stockholder.

Listen as our authoritative panel of M&A attorneys analyzes fiduciary duties in private company M&A deals, emerging issues in conflicted deals involving controlling shareholders, and boards with conflicts due to affiliation with controlling investors. The panel will review recent deal litigation that provides some guidance for private company M&A deals.



  1. Overview of fiduciary duties in M&A transactions
  2. Scenarios in which conflicts of interest arise between controlling and minority shareholders of private companies
  3. Discussion of recent cases highlighting conflicted deals
    1. MFW Shareholders Litigation
    2. SEPTA v. Volgenau
    3. Trados Shareholder Litigation
    4. Other key cases
  4. Best practices for navigating conflicts in private company transactions


The panel will review these and other key questions:

  • What are the emerging issues in conflicted M&A deals involving private companies?
  • What are common scenarios in which conflicts arise between interests of common and preferred stockholders in M&A transactions?
  • What have recent cases held with respect to the appropriate standard of review: Entire fairness or business judgment?
  • Do the fiduciary duties of directors or controlling shareholders in private transactions differ from M&A deals with public companies?
  • How can sponsors and other investors leverage LLCs to address conflict issues, and what unintended consequences should practitioners be wary of when using LLCs?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Brooks T. Giles
Brooks T. Giles

Katten Muchin Rosenman

Mr. Giles is co-head of the firm’s Mergers and Acquisitions practice and concentrates his practice in corporate...  |  Read More

Louis G. Hering
Louis G. Hering

Morris Nichols Arsht & Tunnell

Mr. Hering’s practice includes M&A, with an emphasis on structures involving alternative entities, and the...  |  Read More

James D. Honaker
James D. Honaker

Morris Nichols Arsht & Tunnell

Mr. Honaker's practice focuses on corporate governance, mergers and acquisitions and related issues involving the...  |  Read More

Jeffrey R. Patt
Jeffrey R. Patt

Katten Muchin Rosenman

Mr. Patt represents clients in a wide range of domestic and international mergers and acquisitions and joint ventures,...  |  Read More

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