Insights

Sale of a Company: Director Duties and Personal Protection

May 2, 2011

Management Liability/D&O

Consider this scenario: a company’s CEO tells his board that he has received a compelling offer for the sale of the company. Upon reviewing the offer, the directors agree that the offer is attractive, and think that the shareholders would be well-served to accept the offer. However, as experienced board members, they know that the potential sale of a company is an inflection point for litigation. The board’s next steps are critical, both to maximize shareholder value and to avoid litigation that may result from failing to do so. This article outlines the fundamental duties of a board considering the sale of a company. The article also details what a board can do beyond diligently fulfilling its duties to protect itself from liability and thereby focus entirely on promoting the interest of shareholders.

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All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn