A study by Cornerstone Research showed that in 2010 and 2011, no less than 91 percent of merger and acquisition deals valued at more than $100 million became the subject of lawsuits, and an amazing 95 percent of all proposed acquisitions valued at more than $500 million were attacked by subsequent lawsuits in those years (see my November 2012 CW column for a detailed discussion of this). At those lofty percentages, it seemed M&A litigation had nowhere to go but down in 2012, but that has turned out not to be the case. The most recent research from Cornerstone shows that 2012 was even more litigious, with 93 percent of transactions valued over $100 million becoming the subject of lawsuits and 96 percent of all proposed acquisitions valued at more than $500 million resulting in lawsuits.

The Cornerstone report ("Shareholder Litigation Involving Mergers and Acquisitions -- February 2013 Update") produced several other interesting findings, including:

The majority (64%) of 2012 lawsuits settled, up slightly over 2010 and 2011. The settlements occurred before the deals closed and an average of 42 days after the lawsuit was filed. 

81% of 2012 settlements resulted only in additional disclosures and fees awarded to plaintiff attorneys. Only one of the 67 settlements tracked in 2012 resulted in an increase in the merger price.

In the settlements for 2012 deals, the average agreed-upon plaintiffs' attorney fee was $725,000. Of the 27 disclosed fee amounts, only three were for $1 million or more.

Read the full Cornerstone report here.

Topics