Financial Advisor Conflicts Update

Recently, the Delaware Court of Chancery has examined financial advisor conflicts in the mergers and acquisitions context and emphasized in various opinions that although financial advisors play a valuable role, disclosure of potential conflicts is crucial. This newsletter examines recent Delaware cases focused on financial advisor conflicts in the areas of stapled financing, contingent fee arrangements, prior work and the financial advisor's interest in the transaction, and concludes with some recommended best practices.

In recent cases the Delaware Court of Chancery has increasingly scrutinized financial advisor conflicts in the mergers and acquisitions context. The court has emphasized in various opinions the sentiment that financial advisors play a valuable role, but that disclosure of potential conflicts is crucial and, in the Atheros decision (discussed below), specifically stated financial advisors "serve a critical function by performing a valuation of the