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Responding to an Unsolicited Acquisition Offer: Board Fiduciary Duties and Strategic Considerations

Advance Preparation, Conflicts of Interest, Application of the Business Judgement Rule

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

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Conducted on Wednesday, January 6, 2021

Recorded event now available

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This CLE course will examine critical issues that directors and their counsel should consider in evaluating and responding to an unsolicited acquisition offer. The panel will discuss steps a company can take to prepare in advance for a takeover bid and suggested procedures for mounting an effective response when an unsolicited offer is received.


Current market volatility will likely result in unsolicited acquisition offers for undervalued companies. A target's board must have a strategy for responding to an unsolicited takeover bid which strikes a balance between permitting a takeover that delivers fair value and resisting a proposal that is not in the best interest of their shareholders.

Counsel needs to consider the makeup of the bidder, management, the board, and the shareholders to identify and resolve conflicts of interest and other issues that may arise with respect to the offer. The type of bidder--strategic as opposed to financial, friendly as opposed to hostile--and the proposed deal structure are also critical as they could have significant implications for management and operations.

Selecting a deal team with clearly defined roles can help a board to properly discharge its fiduciary duties. Boards can take actions in advance of receiving an offer to improve their ability to deal with an unsolicited bid, including maintaining and periodically reviewing a strategic plan for long-term success, establishing "on the shelf" anti-takeover defenses, and maintaining a plan for assessing and responding to unsolicited offers.

While application of the business judgment rule may vary from state to state, courts will generally support a board's decision to accept or reject a takeover offer where it follows a reasonable decision-making process with no conflicts of interest. Counsel should ensure that corporate minutes (including those of any special committee) fully reflect the board's evaluation of and response to the offer.

Listen as our authoritative panel discusses best practices for responding to unsolicited acquisition offers and the steps potential targets can take to prepare for unsolicited offers.



  1. Takeover bids in the current environment
  2. Key players: bidder, management, the board, shareholders, regulators
  3. Designing a strategic plan for responding to unsolicited offers
  4. Board of director duties
    1. Identifying conflicts of interest; determining need for special committee
    2. How the type or structure of the offer can affect the response
    3. Application of the business judgement rule
  5. Retaining management and other operational considerations
  6. Takeover defense strategies


The panel will review these and other important questions:

  • When do conflicts of interest arise for directors in responding to a takeover bid and how should they be addressed?
  • What steps can be taken within the board and management to prepare in advance for unsolicited offers?
  • Why is the distinction between a financial and strategic bidder important in fashioning a company's response?
  • What takeover defense strategies can be put in place before (or after) a bid is received?


Aquila, Francis
Francis J. (Frank) Aquila

Sullivan & Cromwell

During the course of his career, Mr. Aquila has advised on deals totaling more than $1 trillion in value, including...  |  Read More

Barnstable-Brown, Christopher
Christopher D. Barnstable-Brown

Wilmer Cutler Pickering Hale and Dorr

Mr. Barnstable-Brown's nationally recognized practice focuses on mergers and acquisitions, corporate governance and...  |  Read More

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