This recent article from Nasdaq’s Center for Board Excellence discusses the insights provided by a panel of experts on shareholder activism during a recent webcast on post-proxy season trends in activism. Panelists included Avinash Mehrotra, Co-Head of Americas M&A and Global Head of Activism & Raid Defense, Goldman Sachs; Marc Goldstein, Head of U.S. Research, Institutional Shareholder Services (ISS); Lori Keith, Board Member, e.l.f. Beauty, Portfolio Manager & Director of Research, Parnassus Investments; and Gabriella Halasz-Clarke, Head of Governance and Sustainability Solutions, Nasdaq.
One of the topics addressed by the panel was how to navigate common activist demands. This excerpt from the article summarizes their advice:
To stay ahead of potential interventions, boards should be able to anticipate activist demands and prepare strategic responses. Three common areas of activist focus include:
1. Return of Capital
Activist Demand: Activists may argue that a company is hoarding cash and that the excess should be returned to shareholders via increased dividends or share buyback programs.
Board Strategy: Regularly review cash management strategies to ensure they align with short-term and long-term objectives. Clearly communicate capital allocation rationale to shareholders to preempt misconceptions or activist criticisms.
2. Business Simplification
Activist Demand: Activists may claim that a company with multiple lines of business lacks strategic focus and efficiency. They often push for restructuring or divestiture of non-core assets.
Board Strategy: Thoroughly evaluate business units for strategic fit and performance. Consider divestiture where appropriate to streamline operations and unlock value.
3. M&A Activity
Activist Demand: Activists scrutinize M&A strategies—especially if execution falters.
Board Strategy: Continuously assess market dynamics to identify opportunities and threats. Articulate to shareholders how M&A aligns with corporate strategy.
The article says that including these topics into the ongoing boardroom dialogue will permit directors to provide swift and strategic responses to activist initiatives that aligned with the board’s long-term vision.
According to Dykema’s “2025 Mergers & Acquisitions Outlook Survey,” dealmakers are fairly upbeat about the prospects for increased M&A activity during the upcoming year. Here are some of the findings:
– When asked whether they expect their company or one of their portfolio companies to be involved in a deal over the next 12 months, the majority of respondents said yes. Acquisitions led the way, with (69%) anticipating activity, followed by joint ventures at (52%), and sales at (50%). These figures reflect a notable uptick from 2024, when (61%) expected acquisitions, (47%) anticipated joint ventures, and (46%) projected sales.
– There’s still plenty of economic uncertainty out there, with respondents citing general economic conditions (42%) and financial market conditions (32%) as the top two factors posing obstacles to deal activity in the next year. Tariffs emerged as a significantly greater concern in 2025, with 30% of respondents identifying them as a key obstacle to dealmaking—up sharply from just 8% in 2024. Company valuations (29%) and availability of quality targets (22%) are also key factors.
– In response to macroeconomic conditions, respondents report shifting their M&A strategy to focus on strategic acquisitions and to mitigate economic uncertainty and the impact of tariffs. When we asked survey participants how their approach to dealmaking has evolved this year, their open-ended responses revealed a clear theme: caution, selectivity, and adaptability.
– 83% of respondents believe PE investors will boost deal volume in the coming year, and 76% expect due diligence to remain a top priority.
– A majority of respondents expect to work on deals involving ESG risk screening in the next year, highlighting its growing role in M&A strategy. Meanwhile, 62% anticipate increased use of R&W insurance, though most expect only a modest rise. Just 4% foresee any decrease in usage.
The survey was conducted in August and September 2025 and contains insights from 216 M&A professionals, including executives, attorneys, bankers, and private equity leaders.
Last week, the Chancery Court issued its post-trial opinion in Camaisa v. Pharmaceutical Research Associates, (Del. Ch.; 10/25), which involved fraud claims arising out of alleged oral statements made by a buyer’s representative concerning the autonomy of an acquired business. When the business subsequently failed to achieve contractual earnout milestones, the plaintiff sued, raising the alleged oral statements in support of fraudulent inducement allegations.
Vice Chancellor Cook was unimpressed. In light of explicit contractual language giving the buyer broad discretion to run the business as it saw fit, the parties post-closing conduct and other evidence impugning the credibility of the allegations, he ruled in favor of the defendants. However, the key takeaway from the opinion was the consequences of the failure to include anti-reliance language in a merger agreement, which converted a case that could have been resolved at the pleading stage into one requiring a full-blown trial.
The Vice Chancellor pointed out that the merger agreement not only didn’t include an anti-reliance clause, but that Section 6.13 of the agreement provided that “[n]otwithstanding anything to the contrary contained in this Agreement, none of the provisions set forth in this Agreement shall be deemed a waiver or other limitation by any Party of any right or remedy which such Party may have at Law or in equity against a Person based on any fraud.” In concluding his opinion, Vice Chancellor Cook pointed out the significant consequences of that choice of language:
This case presents a pointed example of why it is important for transactional parties to draft contractual language concerning fraud carefully. The parties here failed to include an anti-reliance clause in the Agreement. Instead, they bargained for an unusual provision, Section 6.13, which expressly disclaims waiver or “other limitation” of “any fraud” claim “[n]otwithstanding anything to the contrary contained” in the Agreement, including Sections 2.7(h) and 6.6.
When drafters include phrases like “notwithstanding anything to the contrary,” they should perhaps do so with pause and certainly in full awareness of such phrases’ powerful effect. Here, a fraud claim that could otherwise have been resolved at the pleading stage with a handful of drafting changes became something else entirely.
It’s been a long time since we’ve seen a deal jumping attempt as brazen – or as high stakes – as the one that Novo Nordisk is trying to pull off with the pending deal between Pfizer and Metsera. The first thing that’s pretty wild about Novo Nordisk’s move is the structure of its proposal. Here’s an excerpt from Metsera’s 8-K filing describing the terms of Novo Nordisk’s proposed deal:
The Novo Nordisk Proposal is structured in two steps (together, the “Novo Nordisk Transaction”). In the first step, promptly following the signing of the Novo Transaction Agreements (as defined below), a Novo Nordisk subsidiary would pay to Metsera an amount equal to $56.50 per Metsera common share in cash as well as certain amounts in respect of Metsera employee equity and transaction expenses. In exchange, Metsera would issue Novo Nordisk shares of non-voting convertible preferred stock (the “Non-Voting Convertible Preferred Stock”) representing, in the aggregate, 50% of Metsera’s fully-diluted share capital on a post issuance basis. On the same day, Metsera would declare a dividend of $56.50 per Metsera common share, in cash, with a record date ten days following the signing of the Novo Merger Agreement with payment to follow in the days shortly thereafter.
In the second step, which would happen only after receiving approval from Metsera shareholders and relevant regulators as well as the satisfaction of other customary conditions, holders of Metsera common stock and certain employee equity awards would receive one contingent value right (“CVR”) per Metsera common share, subject to certain exceptions, representing the right to receive up to $21.25 in cash based on the achievement of certain development and regulatory approval milestones as described further below (which are substantially the same as those that would be issued in connection with the Pfizer Merger Agreement), and Novo Nordisk would acquire the remainder of the outstanding shares of Metsera via a merger of Metsera with and into a subsidiary of Novo Nordisk.
That non-voting preferred stock would be convertible into common stock to the extent permitted by law, and would rank on a par with Metsera’s common stock on an as-converted basis when it comes to dividends and liquidation rights. In addition, the preferred would convert into common in connection with any transfer of the shares to a non-affiliate of Novo Nordisk.
There are restrictions on transfer of the preferred stock to non-affiliates prior to termination of a merger agreement between Metsera and Novo Nordisk. Those restrictions lapse over a two-year period following such termination. The preferred stock also has the right to force a redemption during the three-year period following termination of the merger agreement in connection with a topping bid or a subsequent acquisition transaction.
Not surprisingly, Pfizer is crapping all over Novo Nordisk’s bid. Here’s an excerpt from its press release responding to the proposal:
Pfizer Inc. (NYSE: PFE) is aware of the reckless and unprecedented proposal by Novo Nordisk A/S (NYSE: NVO) to acquire Metsera, Inc. (NASDAQ: MTSR). It is an attempt by a company with a dominant market position to suppress competition in violation of law by taking over an emerging American challenger. It is also structured in a way to circumvent antitrust laws and carries substantial regulatory and executional risk. The proposal is illusory and cannot qualify as a superior proposal under Pfizer’s agreement with Metsera, and Pfizer is prepared to pursue all legal avenues to enforce its rights under its agreement.
On Friday, Pfizer put its money where its mouth is and filed a lawsuit against Metsera, its board, and Novo Nordisk alleging breaches of the merger agreement and tortious interference.
Metsera’s board apparently disagrees with Pfizer’s assessment and has informed Pfizer that it believes Novo Nordisk’s bid represents a “Superior Company Proposal” under the terms of its merger agreement. Your mileage may vary on the competing assessments of whether Novo Nordisk has submitted a Superior Company Proposal, but if you’re interested, that term is defined in Section 5.02(h) of the merger agreement. Here’s the WSJ’s take on the Superior Company Proposal issue, which notes that Metsera previously rejected a similarly structured proposal from Novo Nordisk:
If Novo’s bid is truly superior, why didn’t Metsera accept a similar one the first time? Why did the Metsera board, as the proxy statement shows, prod Pfizer to sweeten its deal? Under the merger agreement, the definition of “Superior Company Proposal” refers to a weighing of not just price but also regulatory, financing, timing, and legal risks. While shareholders might get more money under Novo’s proposal, Pfizer’s argument that Metsera can’t pay out the dividend under Delaware law and Pfizer’s request for a temporary restraining order to block the merger’s termination already have made Novo’s offer, in essence, riskier.
Pfizer’s press release also pushed all the buttons necessary to attract the attention of antitrust regulators, and its argument that Novo Nordisk has structured its bid to “circumvent antitrust laws” has received some attention from Ann Lipton in a LinkedIn post. There, she points out that Toshiba and Canon got into antitrust trouble a few years ago by using a non-voting preferred stock deal structure to, according to the FTC & DOJ, evade HSR filing requirements.
Section 5.02(e) of the merger agreement gives Pfizer match rights during the four-day period following receipt of notice from Metsera that a Superior Company Proposal has been received, and with Pfizer already throwing punches, it looks like there are going to be several more twists and turns to this transaction before the dust settles. So, sit back and make some popcorn – but since this fight is all about obesity drugs, maybe use the air popper & leave out the butter.
Earlier this month, Boston Consulting Group released its 2025 M&A Report in four parts. Chapter 3 addresses uncertainty. While often considered the “enemy of dealmaking,” the report shows that the impact of uncertainty on deal volume is more nuanced than that.
In turbulent times, average deal values plunge dramatically—down more than 34%, from $280 million to $186 million. This reflects caution amid an uncertain outlook, as few CEOs dare to embark on a headline-making deal when dark clouds are on the horizon.
Conversely, overall deal volume jumps by 27%, fueled primarily by a 70% surge in smaller transactions (less than $50 million). Adopting this “string-of-pearls” strategy of multiple small deals allows executives to deploy capital with reduced exposure.
Sector differences are pronounced. Cyclical sectors such as materials and technology see marked increases in deal activity as companies consolidate to manage volatility and seize opportunities, whereas more stable industries such as health care and consumer experience minimal change.
As uncertainty rises, deal makers prioritize risk avoidance over strategic diversification. Large and midsize cross-border and cross-industry deals plummet by 31% and 70%, respectively, while domestic, same-industry acquisitions surge by nearly 200%.
Wow! The magnitude of the shift in that last statistic surprised me. Also, take a look at Exhibit 4 of the report, which addresses strategic archetypes that are more or less effective in an uncertain environment.
On an unrelated note, as my kids start to age out of trick-or-treating excitement (too soon!), I shared my thanks to Dave on TheCorporateCounsel.net blog this morning for his reflection on Halloween last year. If you will be celebrating tonight, Happy Halloween! May the weather be good and the candy be your favorite.
The latest M&A outlook from Goldman Sachs (available for download) highlights a push toward simplification. Investors reward companies for moving away from a conglomerate model and toward a more narrow geographic focus — and corporates and activists are taking note.
Corporate simplifications continue to fuel M&A as companies look to highlight undervalued assets, separate divergent businesses, and sharpen geographic focus. Large-cap companies ($25B+) moving away from conglomerate models are especially active—representing ~40% of announced and closed spin-offs in 2024.
This trend is driven by:
– The operational complexities of managing corporate assets across multiple regions
– Rising geopolitical tensions
– Evolving market appetites created by the changing pace of energy transition
– A focus on optimizing capital allocation
– Valuation discrepancies that are encouraging corporates to seek more favorable capital markets through new domiciles, listings, or headquarters
So, “corporates are pursuing regional separations to unlock valuation, target specific investor bases, and achieve greater strategic clarity in a shifting global landscape.” The activity is also supported by these trends:
Sponsors are becoming key to simplification by acting as carve-out partners while cost of capital continues challenging returns, and by giving both valuable expertise and credibility to corporates’ transactions.
Creative deal structures are enabling more activity; earnout provisions, collars, and equity rollovers offer innovative solutions tailored to the specific needs of each company.
Activism is accelerating spin-offs, but spin-offs are also accelerating activism amid a newfound focus on SpinCos—underscoring the importance of governance and adequate capitalization for newly spun-off companies.
On Monday, in a memorandum opinion in Wright v. Farello et al.(Del. Ch.; 10/25), Chancellor McCormick dismissed claims that an advance-notice bylaw was facially invalid. While the bylaw at issue was “long, broad, and overly complicated,” a stockholder could comprehend it, even if doing so took “a good bit of work.”
Defendants first argued that the plaintiff’s challenge was not ripe, citing the Chancery Court’s April decision in Siegel v. Morse because “Plaintiff does not—and cannot—allege that he or any other stockholder attempted to nominate a director and does not allege that any such effort was rejected by the Board.” Chancellor McCormick distinguished that case since Siegel disclaimed a facial validity challenge. She said Delaware’s approach leaves the determination to the courts and concluded that it was appropriate to resolve this matter on the merits.
A facial challenge presents a pure question of law, the material facts are static, and there is thus no need to postpone resolution to allow for the question to arise in a more concrete form. For that reason, Delaware courts routinely resolve facial challenges without undertaking ripeness analyses.
Plaintiff argued that the bylaw is unintelligible and that complying with it is impossible. While Chancellor McCormick said, “the Acting-in-Concert Provision is a sea of subparts, which take a bit of effort to comprehend,” and spent seven pages discussing its requirements before diving into the facial invalidity analysis, she ultimately disagreed with the plaintiff.
“[U]nintelligible” means that the words are incomprehensible. That is, a person cannot comprehend their meaning. Kellner captures the commonsense understanding that sometimes a complicated provision is so convoluted as to make zero sense. When a rule crosses the line from hard-to-understand to unintelligible, then no one will know how to apply it. At that point, the rule “cannot operate lawfully under any set of circumstances” because it cannot operate at all.
The Bylaw is a lot to take in. Parts of it are quite broad. And others are confusing. But does it cross the line to unintelligible? . . . [A] provision’s breadth does not necessarily render it unintelligible. Broad in this context means “extending far and wide.” That is not the same as incomprehensible. Parts A through C are broad because they cover an expansive set of conduct. But (with a good bit of work) a stockholder can comprehend them.
Plaintiff also criticized the daisy chain provision for requiring nominating stockholders to disclose persons unknown to them. To this, Chancellor McCormick said:
[W]hat the Bylaw effectively does is impose on any Proposing Person the obligation to ask the people with whom she is Acting in Concert whether they are acting in concert with anyone else. In this way, the Bylaw imposes an investigative burden on the Proposing Person.
A stockholder might rightly take issue with that requirement as burdensome to the point of unreasonable. But where a party brings a facial challenge to a bylaw, the court does not assess reasonableness—that analysis is reserved for as-applied challenges. The investigative burden imposed by the Bylaw is onerous. But it does not render the Bylaw unintelligible.
This provision was also not impossible to comply with — it just required some investigation.
This HLS blog post from John Johnston of Vinson & Elkins and Christine O’Brien of Edelman Smithfield asks — and answers with examples — how boards know when settling with an activist is unlikely to be the right outcome and a proxy fight is necessary. Here are some scenarios they highlight:
– When the board believes the demands are unreasonable — for example, board composition changes that mean disproportionate influence for the activist, reduced independence or fewer key skillsets represented on the board
– When the board believes the outcome proposed by the activist is not in the best interest of shareholders — for example, when the activist is seeking a publicly disclosed sale process or strategic review, but the company has already privately tested the waters and the board believes a public process would destroy value
– When the activist seeks removal of a CEO and that CEO has full support of the board and no near-term viable successor
– When an activist insists that a member of their team join the board but the board expects this would materially disrupt board dynamics and vision
To avoid rushing to settle with a suboptimal outcome, the blog suggests that, before negotiations, a board may want to:
– Define clear non‑negotiables
– Align on what it will and will not accept
– Honestly assess their position
– Evaluate their relative strength
That includes taking into account TSR and financial results against peers, investor sentiment, analyst views, and management’s credibility on long-term strategy to assess what is in the best interests of the corporation.
As John has shared on TheCorporateCounsel.net, Prof. Ben Edwards has been tracking the status of all 2025 public company Nevada reincorporation proposals. In addition to his tabular scorecard, he’s also been highlighting stated rationales. For the four latest nano-cap companies, cost has been disclosed as a material factor.
His latest blog also addresses some common issues he’s seen from reviewing disclosures by the now 25 companies that have sought to reincorporate to Nevada. The issues largely stem from the fact that various versions of the Nevada Revised Statutes are incomplete or not up to date. Here are his tips for counsel drafting filings related to Nevada reincorporations:
– Nevada’s statute online is out of date. You can access the Nevada Revised Statutes online, but you shouldn’t trust them until they’re updated. The 2025 revisions to the Nevada statute went into effect on May 30, 2025 upon Governor Lombardo’s signature. Westlaw has updated its version of the Nevada Revised Statutes. As of today, LexisNexis has not yet updated and is just as out of date as the Nevada website.
– The Nevada statute exempts public companies from stockholder inspection actions so long as they keep making their securities filings. The 15% threshold is for private companies.
– The Nevada statute does define controlling stockholders. It’s NRS 78.240. It provides that a controlling stockholder is “a stockholder of a corporation having the voting power, by virtue of such stockholder’s relative beneficial ownership of shares or otherwise pursuant to the articles of incorporation, to elect at least a majority of the corporation’s directors.” The statutory duty “is to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by such director or officer.” You will not currently find this on the Nevada website or LexisNexis. You should pull it up on Westlaw or use the legislative materials.
These disclosure issues have caused him to “develop concerns that not every firm reincorporating to Nevada has consulted with a Nevada lawyer about Nevada law.”
EY recently published its monthly report on M&A activity, and had a lot of positive things to say about the current deal environment. Here are some of the highlights:
– September 2025 saw overall deal value soar, driven by several high-value transactions, with private equity (PE) continuing to play a leading role. Deal value jumped 109.7% in the month compared with a year earlier, while M&A activity increased 41% in volume compared to the same period.
– Overall, mega deals (US$5b+) increased by 176.4% in value and 80% in volume compared to September 2024. The US led the market, representing about 72% of global deal value in September.
– The surge in mega deals during September set the stage for a record-breaking Q3 2025, which emerged as the most active period for M&A this year. Compared to Q3 2024, total deal value rose by 238.7% and deal volume increased by 163.6% for deals valued US$5b+, underscoring heightened investor confidence and a strong appetite for large-scale strategic transactions.
– PE was a major force behind the increase in US deal activity in the month, fueling both M&A and initial public offerings.
The report says that deal momentum moving into the fourth quarter remains strong. It cites a significant backlog of deals poised to move forward if market conditions continue to stabilize, and says that 48% of CEOs globally plan to pursue more deals. So, what could throw the proverbial turd in the year-end dealmaking punchbowl? The report cites unstable tariffs, new investigations and the federal government shutdown.