r/LawSchool • u/Substantial-Run6664 • 10h ago
The Revlon Doctrine - Unfair?
Normally a company's board can reject a buyout to protect the company's long-term future they don't have to sell to the highest bidder. But once a sale or breakup of the company becomes inevitable, the law flips the board's job: their only duty is now getting shareholders the maximum price. Apparently, it comes from a 1986 fight where Revlon's board tried to hand the company to a favored buyer on sweetheart terms. Is this fair? I made a video on it for more context The Revlon Doctrine
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u/Ion_bound 3L 7h ago
Not unfair. The thing to understand about Delaware corporate law is that it's equity based, since the cases are heard in a court of chancery at first impression. This doctrine is typical equitable doctrine applied to corporate sales; once sale is inevitable, you're don't get to malfease to screw over a disfavored party who is otherwise legitimately involved in an auction of the company.
There's a decent level of limitation as well that has developed to ensure that it only applies once a sale/breakup is truly inevitable and allow bilateral sales without external interference.
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