![]() ![]() The Court reasoned that where a conflicted financial advisor has prevented the board from conducting a reasonable sales process, the advisor may be liable for aiding and abetting the board’s breach of fiduciary duties even if the individual directors are exculpated from liability for their breach. The Court of Chancery thus held that at the pleadings stage, the plaintiff’s aiding-and-abetting claim against J.P. The Court found it reasonably inferable that Apollo outlasted other potential buyers and was able to acquire Fresh Market due to J.P. The Court agreed with the plaintiffs that one could reasonably infer this disclosure was “artfully drafted” to omit the backchannel communications with Apollo. Morgan’s conflict of interest disclosures to Fresh Market’s board of directors indicated its “senior deal team members” were not currently “providing services” for the members of J.P. Morgan to solicit inside information about the bid process and negotiating dynamics. Throughout the sales process, Apollo allegedly communicated with its “client executive” at J.P. Morgan $116 million in fees in the two years preceding the transaction. Morgan, which during its negotiations with Apollo generated downward adjustments to management projections and adjustments to its discounted cash flow analysis that resulted in a lower valuation range for Fresh Market. ![]() Fresh Market relied on its financial advisor, J.P. The Apollo group of equity investors sought to acquire the Fresh Market grocery store chain in a going-private transaction in conjunction with other large equity holders. June 1, 2020)Įven if fiduciary duty of care claims against a target company’s board of directors are exculpated, an aiding-and-abetting claim against a financial advisor to the board may survive a motion to dismiss when the advisor is alleged to have knowingly misled the board and prevented the board from running a reasonable sales process. Posted In Aiding and Abetting Claims, Fiduciary Duty, M&A ![]()
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