Fritz over at Sneaking Suspicions posts re the latest Technicolor decision - the 18 year long and counting takeover lawsuit. He flags the part of the opinion that also struck me as key; i.e., Chandler's explanation of the appraisal process and accompanying slap at the Delaware supreme court:
As expected, the occasional Chandlerism also makes a very early appearance, on page 3 of the main text.
Although 8 Del. C. § 262 requires this Court to determine “the fair value” of a share of Technicolor on January 24, 1983, it is one of the conceits of our law that we purport to declare something as elusive as the fair value of an entity on a given date, especially a date more than two decades ago. Experience in the adversarial, battle of the experts’ appraisal process under Delaware law teaches one lesson very clearly: valuation decisions are impossible to make with anything approaching complete confidence. Valuing an entity is a difficult intellectual exercise, especially when business and financial experts are able to organize data in support of wildly divergent valuations for the same entity. For a judge who is not an expert in corporate finance, one can do little more than try to detect gross distortions in the experts’ opinions. This effort should, therefore, not be understood, as a matter of intellectual honesty, as resulting in the fair value of a corporation on a given date. The value of a corporation is not a point on a line, but a range of reasonable values, and the judge’s task is to assign one particular value within this range as the most reasonable value in light of all of the relevant evidence and based on considerations of fairness.
The footnote accompanying this passage makes a typically Chandlerian wry note about relative competence:
Many commentators have recognized the indeterminate nature of the search for the fair or intrinsic value of a company. Professors Allen and Kraakman have also noted the institutional disinclination of Chancery judges to engage in the valuation process in certain circumstances precisely because those judges recognize it as a “daunting task” subject to significant uncertainty. The same institutional pressures that result in this disinclination at the Chancery Court level, of course, do not apply at the appellate level and may explain why the Supreme Court exhibits more confidence in the ability to ascertain the fair value of an enterprise. See [citation to competing text struck, because that's just the kind of guy I am].
The Technicolor litigation has not been one of the Delaware supreme court's better efforts. At virtually every opportunity, the supreme court has made really bad law in this case. As a result, Technicolor crops up for criticism in at least three chapters of my Corporation Law and Economics. (See my earlier post Cinerama v. Technicolor: The Anticlimax.)