Report shows number and total value of settlements rising sharply since 2019.
The number and total aggregate amount of settlements in merger and acquisition (M&A)-related lawsuits in the Delaware Court of Chancery have increased substantially since 2019, according to a new report released today by Cornerstone Research, which shows the total aggregate settlement amount exceeding $600 million in 2024.
The report, M&A Litigation Settlements in the Delaware Court of Chancery—2012–2024 Review & Analysis, examines 118 monetary settlements between 2012 and 2024 in M&A-related litigation filed in the Delaware Court of Chancery. In 2024, 21 such settlements totaled $618.3 million in the aggregate, a significant increase from five settlements totaling $110.1 million in the aggregate in 2019. The report also observed that of the 10 settlements within the study period that equaled or exceeded $100 million, four have occurred since 2022. The most common settlement amounts during 2022–2024 ranged between $20 million and $50 million, while the most common settlement amounts in prior periods were below $10 million.
Our analysis shows an upward trend in both the number and overall value of settlements, particularly in the past three years.
“Our analysis shows an upward trend in both the number and overall value of settlements, particularly in the past three years,” said Frank Schneider, a vice president at Cornerstone Research and coauthor of the report.
While large settlements contributed to the increasing total aggregate settlement amount in recent years, the increase is also attributable to an uptick in smaller settlements. During 2022–2024, parties reached 18 settlements ranging between $20 million and $50 million, 12 settlements ranging between $10 million and $20 million, and 14 settlements of less than $10 million, surpassing the same number in each range for the five-year periods of 2017–2021 and 2012–2016. As a percentage of transaction value, the largest increase in 2022–2024 relative to prior periods was for settlements with amounts less than 2.5% of transaction value (29), relative to 11 and 10 such settlements in 2017–2021 and 2012–2016, respectively.
Many of the cases also involve allegations against controlling stockholders.
“Settlements in our sample represent transactions with larger overall deal values than the broader M&A market,” said Paul Zurek, a vice president at Cornerstone Research and coauthor of the report. “As we show in the report, many of the cases also involve allegations against controlling stockholders.”
In 78% of settlements, the plaintiffs were stockholders of the target company in the M&A transaction, while 74% of settlements included allegations involving actions by the controlling stockholder. Together, the findings suggest a “typical” settlement is one involving a dispersed group of stockholders alleging unfair consideration paid for their shares due to alleged actions by a controller.