August 28, 2013
Financial adviser conflicts, whether arising from prior relationships or from the financial adviser's interest in providing buy-side financing, have been a focus in M&A litigation for several years. A second or backup fairness opinion from an independent financial adviser is commonly used to offset the effect of such conflicts, but the Court of Chancery has expressed skepticism as to the value and effectiveness of a second adviser's opinion in conflict situations, as in Ortsman v. Green, C.A. No. 2670-N (Del. Ch. Feb. 28, 2007) (ordering expedited discovery where the target's financial adviser participated in buy-side financing despite the company's retention of a separate financial adviser to render a fairness opinion). However, a recent Court of Chancery opinion, In re Morton's Restaurant Group Shareholders Litigation, C.A. No. 7122-CS (Del. Ch. July 23, 2013), demonstrates that a second financial adviser, when properly engaged and actively involved, can help to overcome a merger challenge based upon a primary financial adviser's alleged lack of independence.