Definition
Appraisal rights (also called dissenters’ rights) are statutory rights granted by state corporation law allowing shareholders who dissent from a merger to demand a judicial determination of the “fair value” of their shares — independent of the merger consideration.
Delaware §262
The dominant U.S. appraisal regime. Available in most mergers but with notable exceptions:
- Generally not available for shares listed on a national exchange where the consideration is stock of another listed company
- Not available in short-form mergers under §253 prior to amendments — currently available
- Available for back-end mergers following tender offers where consideration is cash
Procedure
- Shareholder demands appraisal in writing before vote (or, post-tender, within statutory window)
- Does not vote in favor of the merger (or doesn’t tender)
- Files a verified petition in Court of Chancery within 120 days
- Court conducts a “fair value” trial — typically employing DCF and comparable-companies analysis
- Court awards fair value plus statutory interest
Why it matters
Appraisal has historically been a tool for sophisticated minorities to extract premiums in deals they viewed as underpriced. Delaware §262 amendments (2016, 2020) have reduced this trade by allowing prepayment to stop interest accrual and limiting appraisal in arms-length deals.