Professor Keith Sharfman, a nationally recognized expert on valuation in corporate appraisal disputes and other legal contexts, has had a recently posted paper featured on Bainbridge, a widely read corporate law blog by UCLA corporate law scholar Stephen Bainbridge, which reviews the piece and describes it as an “[i]mportant new article.”

The paper, “The Exit Theory of Judicial Appraisal,” co-authored with Emory University corporate law scholar William J. Carney, builds on the authors’ prior work critiquing the “discretionary valuation” approach by which corporate valuation disputes are usually resolved. That approach tends to produce arbitrary and unpredictable valuation outcomes that encourage litigation and hinder settlement. Carney and Sharfman trace the history of the appraisal remedy and find that it was originally designed merely to ensure that minority shareholders could dissent and exit from a deal they did not like but not to guarantee that they would receive a fair (or even any) share of deal value. The paper further demonstrates that this “Exit Theory” objective is adequately protected by the extant private arrangements and fiduciary duty doctrines that are commonly utilized in current corporate law and practice.

The Bainbridge post is available here.

The full paper and abstract by Carney & Sharfman are available here.

Keith Sharfman
Professor of Law