Sale of a Company: Director Duties and Personal Protection

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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