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Dell, Inc. v. Magnetar Global Event Driven Master Fund Ltd.

Supreme Court of Delaware

December 14, 2017

DELL, INC., Respondent-Below, Appellant/Cross-Appellee,

          Submitted: September 27, 2017

         Court Below: Court of Chancery of the State of Delaware Consolidated C.A. No. 9322-VCL

         Upon appeal from the Court of Chancery. REVERSED in part, AFFIRMED in part, and REMANDED

          Gregory P. Williams, Esquire (argued), John D. Hendershot, Esquire, Susan M. Hannigan, Esquire, and Andrew J. Peach, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware. Of Counsel: John L. Latham, Esquire, and Susan E. Hurd, Esquire, Alston & Bird LLP, Atlanta, Georgia; Gidon M. Caine, Esquire, Alston & Bird LLP, East Palo Alto, California; and Charles W. Cox, Esquire, Alston & Bird LLP, Los Angeles, California, for Appellant/Cross-Appellee Dell Inc.

          Stuart M. Grant, Esquire (argued), Michael J. Barry, Esquire, Christine M. Mackintosh, Esquire, and Rebecca A. Musarra, Esquire, Grant & Eisenhofer P.A., Wilmington, Delaware, for Appellees/Cross-Appellants Morgan Stanley Defined Contribution Master Trust; AAMAF, LP; CSS, LLC; Merlin Partners, LP; William L. Martin; Terence Lally; Arthur H. Burnet; Darshanand Khusial; Donna H. Lindsey; Douglas J. Joseph Roth Contributory IRA; Douglas J. Joseph & Thuy Joseph, Joint Tenants; Geoffrey Stern; James C Aramayo; Thomas Ruegg; and Rene A. Baker.

          Samuel T. Hirzel, II, Esquire (argued), and Melissa N. Donimirski, Esquire, Heyman Enerio Gattuso & Hirzel LLP, Wilmington, Delaware. Of Counsel: Lawrence M. Rolnick, Esquire, and Steven M. Hecht, Esquire, Lowenstein Sandler LLP, New York, New York, for Appellees/Cross-Appellants Magnetar Global Event Driven Master Fund Ltd; Magnetar Capital Master Fund Ltd; Global Continuum Fund Ltd; Spectrum Opportunities Master Fund Ltd; Blackwell Partners LLC; and Wakefield Partners LP.

          Before STRINE, Chief Justice; VALIHURA, VAUGHN, and TRAYNOR, Justices; and LeGROW, Judge [*] constituting the Court en Banc.


         The petitioners left standing in this long-running appraisal saga are former stockholders of Dell Inc. ("Dell" or the "Company") who validly exercised their appraisal rights instead of voting for a buyout led by the Company's founder and CEO, Michael Dell, and affiliates of a private equity firm, Silver Lake Partners ("Silver Lake"). In perfecting their appraisal rights, petitioners acted on their belief that Dell's shares were worth more than the deal price of $13.75 per share-which was already a 37% premium to the Company's ninety-day-average unaffected stock price.

         Our appraisal statute, 8 Del. C. § 262, allows stockholders who perfect their appraisal rights to receive "fair value" for their shares as of the merger date instead of the merger consideration. The appraisal statute requires the Court of Chancery to assess the "fair value" of such shares and, in doing so, "take into account all relevant factors." The trial court complied: it took into account all the relevant factors presented by the parties in advocating for their view of fair value-including Dell's stock price and deal price-and then arrived at its own determination of fair value.

         The problem with the trial court's opinion is not, as the Company argues, that it failed to take into account the stock price and deal price. The trial court did consider this market data. It simply decided to give it no weight. But the court nonetheless erred because its reasons for giving that data no weight-and for relying instead exclusively on its own discounted cash flow ("DCF") analysis to reach a fair value calculation of $17.62-do not follow from the court's key factual findings and from relevant, accepted financial principles.

         "When reviewing a decision in a statutory appraisal, we use an abuse of discretion standard and grant significant deference to the factual findings of the trial court. This Court 'will accept [the Court of Chancery's] findings if supported by the record . . . .'"[1] We defer to the trial court's fair value determination if it has a "reasonable basis in the record and in accepted financial principles relevant to determining the value of corporations and their stock."[2]

         Here, the trial court gave no weight to Dell's stock price because it found its market to be inefficient. But the evidence suggests that the market for Dell's shares was actually efficient and, therefore, likely a possible proxy for fair value. Further, the trial court concluded that several features of management-led buyout ("MBO") transactions render the deal prices resulting from such transactions unreliable. But the trial court's own findings suggest that, even though this was an MBO transaction, these features were largely absent here. Moreover, even if it were not possible to determine the precise amount of that market data's imperfection, as the Court of Chancery concluded, the trial court's decision to rely "exclusively" on its own DCF analysis[3] is based on several assumptions that are not grounded in relevant, accepted financial principles.

         We REVERSE, in part, and AFFIRM, in part, and REMAND for these reasons and those that follow. In addition, for reasons discussed in Section IV, we REVERSE and REMAND the Court of Chancery's decision concerning the allocation of fees and costs among the appraisal class.


         A. Dell

         In June 2012, when the idea of an MBO first arose, Dell was a mature company on the brink of crisis: its stock price had dropped from $18 per share to around $12 per share in just the first half of the year. The advent of new technologies such as tablet computers crippled the traditional PC-maker's outlook. The Company's recent transformation struggled to generate investor optimism about its long-term prospects. And the global economy was still hungover from the financial crisis of 2008.

         Other than a brief hiatus from 2004 to his return in 2007, Michael Dell had led Dell as CEO, from the Company's founding in his first-year dorm room at the University of Texas at Austin when he was just nineteen years old, to a Fortune 500 behemoth with global revenues hitting $56.9 billion in the fiscal year ending February 1, 2013.[4] Dell was indisputably one of the world's largest IT companies.[5]

         i. Michael Dell's Return and the Company's Challenges

         Upon his return to the Company in 2007, Mr. Dell[6] perceived three key challenges facing Dell. First, low-margin PC-makers such as Lenovo were muscling into Dell's market share as the performance gap between its higher-end computers and the cheaper alternatives narrowed. Second, starting with the launch of Apple's iPhone in 2007, the impending onslaught of smartphones and tablet computers appeared likely to erode traditional PC sales. Third, cloud-based storage from the likes of threatened the Company's traditional server storage business.

         In light of these threats, Mr. Dell believed that, to survive and thrive, the Company should focus on enterprise software and services, which could be accomplished through acquisitions in these spaces. From 2010 through 2012, the Company acquired eleven companies for approximately $14 billion. And Mr. Dell tried to sell the market on this transformation. He regularly shared with equity analysts his view that the Company's enterprise solutions and services divisions would achieve annual sales growth in the double-digits and account for more than half of Dell's profits by 2016.

         Yet despite Dell's M&A spurt and Mr. Dell's attempts to persuade Wall Street to buy into the Company's future, the market still "didn't get" Dell, as Mr. Dell lamented.[7] It still viewed the Company as a PC business, and its stock hovered in the mid-teens.

         ii. The Market for Dell's Stock

         Dell's stock traded on the NASDAQ under the ticker symbol DELL. The Company's market capitalization of more than $20 billion ranked it in the top third of the S&P 500.[8] Dell had a deep public float[9] and was actively traded as more than 5% of Dell's shares were traded each week.[10] The stock had a bid-ask spread of approximately 0.08%.[11]It was also widely covered by equity analysts, [12] and its share price quickly reflected the market's view on breaking developments.[13] Based on these metrics, the record suggests the market for Dell stock was semi-strong efficient, meaning that the market's digestion and assessment of all publicly available information concerning Dell was quickly impounded into the Company's stock price.[14] For example, on January 14, 2013, Dell's stock jumped 9.8% within a minute of Bloomberg breaking the news of the Company's take-private talks, and the stock closed up 13% from the day prior-on a day the S&P 500 as a whole fell 0.1%.[15]

         B. The Sale Process

         The first inkling of a Dell MBO can be traced to June 2012, when private equity executive Staley Cates of Southeastern Asset Management suggested to Mr. Dell that he might consider taking the Company private.[16] Mr. Dell was intrigued as he believed it would be easier to execute the Company's transformation plan unencumbered by stockholder pressure.[17] However, the Company's financial advisor, Goldman Sachs, warned that an MBO would be too difficult to pull off.[18] But after Silver Lake's Egon Durban also proposed the idea of an MBO that August, Mr. Dell enlisted the advice of friend and private equity executive George Roberts of Kohlberg Kravis Roberts & Co. L.P. ("KKR").[19] This time, he received positive feedback, including an indication that KKR might be interested in participating should the Company go that route.[20] Mr. Dell then brought the idea to Dell's Board by calling the Company's lead independent director, Alex Mandl, on Friday, August 14, 2012.[21]

         The following Monday, the Board met and created an independent special committee composed of four independent directors (the "Committee") to evaluate possible transactions to acquire the Company proposed by Mr. Dell and/or any other party, as well as to explore possible strategic alternatives. The Board empowered the Committee to hire its own legal and financial advisors, and the Committee selected Debevoise & Plimpton LLP as legal counsel and JP Morgan Chase & Co. as financial advisor. (The Committee eventually hired Evercore Partners as a second financial advisor in January 2013.) The Committee also had full and exclusive authority to recommend to the Board a course of action regarding any proposed transaction, and the Board vowed not to recommend that stockholders approve a transaction without receiving a prior favorable recommendation from the Committee.

         Dell's earnings for the second quarter of Fiscal 2013, announced the following day, August 21, 2012, underscored the Company's challenges: revenue was down 8% from the prior year, and earnings per share dropped 13%. The Company's revenue fell short of expectations, and its management further revised its EPS forecast down 20% for Fiscal 2013. Dell management said that the Company was amid a "long-term strategy" expected to "take time" to reap benefits.[22] But one analyst called the Company a "sinking ship" and emphasized that "Dell's turnaround strategy is fundamentally flawed [and] the fundamentals are bad. Dell may have responded too late to save itself."[23] Many analysts also revised their price targets downward.

         i. The Pre-Signing Canvass

         The following month, September, after entering into confidentiality agreements with the Committee, Silver Lake and KKR began evaluating Dell's proprietary data, including management projections.

         Mr. Dell, who owned 13.9% of the Company's outstanding shares as of August 2012 and 15.4% as of September 2012, also entered into a confidentiality agreement. Mr. Dell's confidentiality agreement required him to, among other things, "explore in good faith the possibility of working with any such potential counterparty or financing source if requested by the Committee, " a provision designed to prevent his prior involvement with KKR and Silver Lake from deterring other possible bidders.[24]

         After consulting with JPMorgan, the Committee decided to limit its initial pre-signing market canvass to KKR and Silver Lake because they were, according to JPMorgan, "among the best qualified potential acquirers, " and "there was a low probability of strategic buyer interest in acquiring the Company."[25] Using management forecasts that the Committee still considered "overly optimistic, "[26] on October 9, 2012, the day after the Company's stock price closed at $9.66 per share, JPMorgan shared with the Committee that it believed a financial sponsor could pay approximately $14.13 per share and still obtain an internal rate of return ("IRR") of a level that could attract private equity buyers such as KKR and Silver Lake, a five-year IRR of 20% per share.[27] At several Committee meetings that fall, JPMorgan and the Company's bankers from Goldman Sachs shared a range of valuations for various transaction scenarios, including Goldman's projections for the Company's future share prices if Dell remained a standalone public Company.[28]

         On October 23, 2012, a day on which Dell's stock price was to close at $9.35, both KKR and Silver Lake proposed transactions to the Committee. KKR indicated its interest in an all-cash transaction at between $12.00 and $13.00 per share, excluding Mr. Dell's and Southeastern's shares. Under KKR's proposal, Mr. Dell was to invest an additional $500 million in the Company. Silver Lake proposed an all-cash transaction at between $11.22 and $12.16 per share, excluding Mr. Dell's shares.

         But, as JPMorgan observed when reviewing these proposals with the Committee, these expressions of interest undershot the $14.13 per share that it believed a financial sponsor could pay. The Committee asked Mr. Dell to email both firms to encourage them to raise their offers, and he obliged-sending the same email to each in which he offered for Company management to meet with representatives of each firm and solicited their advice on what the Company could do to help improve their proposals.[29]

         But the Company's third-quarter earnings, released on November 15, 2012, brought more bad news for Dell: revenue dropped 11% from the prior year, and EPS was down 28%. During this period when Dell was trying to sell its long-term vision without success, it kept failing the quarterly tests on which so many market analysts focus. By way of example, this was the sixth of the past seven quarters that revenue fell below consensus estimates. As research analysts lowered their price targets out of concern for the future of the PC industry and growing skepticism about Dell's turnaround strategy, even CFO Brian Gladden acknowledged that "[m]anagement projections appear optimistic given valuation & sell-side estimates of Dell future value."[30] The Committee enlisted Boston Consulting Group ("BCG") to formulate independent projections for the Company.

         By December 3, 2012, KKR withdrew its proposal as it was unable to "get [its] arms around the risks of the PC business."[31]

         For his part, Mr. Dell remained open "to join up with whoever" and was willing to supply as much equity as necessary for a transaction.[32] To restore competition to the process once KKR dropped out, the Committee asked another PE heavyweight, Texas Pacific Group ("TPG"), who had recently invested in Dell's down-market rival Lenovo, to explore an acquisition.[33] Though TPG signed a confidentiality agreement, obtained access to the data room, "spent a good deal of resources on it, "[34] and its leaders sat through presentations by Dell management, the PE firm reported to the Committee on December 23, 2012, that it decided not to submit a bid as "cash flows attached to the PC business were simply too uncertain, too unpredictable to establish an investment case."[35]

         By January 24, 2013, three additional parties had expressed a desire to explore a deal. GE Capital, a "strategic party, " told Evercore that it was interested in buying the Dell Financial Services business for approximately the book value of its assets, between $3.5 and $4 billion.[36] Blackstone also called Evercore with a heads-up that it anticipated exploring a Dell deal during the go-shop and "seeking assurances that any definitive agreement the Company may be considering entering into would provide for a meaningful go-shop process."[37] Last, Southeastern sought to enter into a confidentiality agreement and start reviewing the Company's confidential information.[38]

         News that Dell was exploring a strategic transaction had been leaking out since December, and Evercore reasoned that "if there were any people out there who were actively interested, there was a good chance they would have already come forward."[39]

         For its part, Silver Lake remained interested in a deal through it all. Over the course of negotiations, the Committee persuaded Silver Lake to raise its offer six times from its initial proposal of $11.22-to-$12.16 per share.[40] It helped that, after the Board resolved to seek $13.75 per share and settle for no less than $13.60 per share, Mr. Dell agreed to accept a lower price to roll over his shares than unaffiliated stockholders were to receive. On February 3, Silver Lake presented the Committee two options greater than its existing $13.50 per share offer: either (i) $13.60 per share if it allowed the Company to continue its regular quarterly dividend payment through closing, or (ii) $13.75 all-cash with no additional dividends. After the Committee told Silver Lake that $13.60 would not suffice under the first alternative, Silver Lake boosted the cash component to $13.65 per share on February 4, its "best and final offer."[41]

         The Committee met with its financial advisors on the afternoon of February 4: both Evercore and JPMorgan indicated that they considered $13.65 per share fair to the unaffiliated stockholders from a financial point of view.[42] The Committee recommended that the Board accept Silver Lake's offer, and, aside from Mr. Dell, who was not present, the Board unanimously adopted resolutions approving the transaction.[43] The next morning, February 5, 2013, the Company and three entities affiliated with Silver Lake and Mr. Dell (collectively the "Buyout Group") entered into the merger agreement dated February 5, 2013 (collectively with amendments, the "Merger Agreement"), and they publicly announced the planned transaction.[44]

         Mr. Dell signed a voting agreement wherein he pledged that he and his affiliates would vote their shares in proportion to the number of unaffiliated shares that vote for either (i) a "Superior Proposal" as defined in the Merger Agreement which, if available, would terminate the Merger Agreement; or (ii) the adoption of the Merger Agreement if the Board changed its recommendation.[45] This meant that any outside bidder who persuaded stockholders that its bid was better would have access to Mr. Dell's votes, eliminating one of the key problems other bidders may face when there is a CEO with material voting power.

         The transaction contemplated that Mr. Dell would roll over his shares at $13.36 per share and invest up to $500 million in additional equity and that an affiliate of his would invest up to $250 million in additional equity. This transaction structure would give Mr. Dell a 74.9% stake in the Company post-closing, and Silver Lake a 25.1% stake.

         The Merger Agreement also provided for a forty-five-day go-shop period ending March 23, 2013; a one-time match right for the Buyout Group available until the stockholder vote; and termination fees of $180 million if the Company agreed to a Superior Proposal as defined in the Merger Agreement that materialized during the go-shop period, or $450 million if the Company agreed to a non-Superior Proposal or to bids produced after the go-shop period.

         ii. The Go-Shop Period

         Led by Evercore, the go-shop period began on February 5, 2013. Within ten days, Evercore had surveyed the interest of sixty parties, including Blackstone and Hewlett-Packard ("HP"), the two parties that Evercore had identified as Dell's top prospects for a deal aside from the Buyout Group.

         As the Company's closest competitor, HP appeared the natural strategic partner for a deal. Though Evercore told HP that a deal with Dell could realize between $3 and 4 billion in annual cost savings through synergies and HP signed a confidentiality agreement, HP's representatives never logged into the data room.

         The Company received its first non-binding proposal of the go-shop period on March 5, 2013, when Carl Icahn of Icahn Enterprises L.P. ("Icahn") wrote a letter to the Board opposing the MBO as announced and proposing a leveraged recapitalization instead. After signing a confidentiality agreement, Icahn accessed the data room on March 11.

         On March 21, 2013, GE Capital again offered to purchase the Company's financial services business, this time for $3.6 billion in cash, and said that it was willing to allow the Committee to consider its proposal in conjunction with any other bid.

         The next day, Icahn submitted a revised non-binding proposal that was to allow stockholders to choose between either (i) rolling over their shares into a new entity one-to-one, or (ii) receiving $15.00 per share in cash up to $15.6 billion in total cash payments. Under this plan, if more stockholders requested cash than available under the $15.6 billion cap, the $15.6 billion would be distributed pro rata among all those stockholders requesting cash. Evercore valued this proposal at between $13.37 and $14.42 per share.

         That day, March 22, 2013, Blackstone and a group of other possible investors also submitted a non-binding proposal that involved a choice: existing Dell stockholders could receive $14.25 per share in cash or stock in a new entity valued at $14.25 capped at the total amount of equity issued by the new entity. Evercore and JPMorgan each said this proposal was worth $14.25 per share.

         By the time the go-shop period ended on March 23, Evercore had contacted sixty-seven parties, including twenty potential strategic buyers and seventeen financial sponsors, about their interest in a transaction involving Dell.[46] Evercore also received unsolicited inquiries from two strategic parties and two financial sponsors.[47]

         Mr. Dell was available to all parties throughout the go-shop period. Though Mr. Dell wanted to go on a two-week vacation that spring, Evercore insisted that he stay given that he "wasn't unavailable to Silver Lake at any point during their final 2 pre-offer weeks."[48]

         C. After the Go-Shop

         Because the Icahn and Blackstone proposals could both potentially lead to Superior Proposals under the Merger Agreement, they qualified as Excluded Parties, which meant Dell would only have to pay a $180 million termination fee if it chose to forego the Silver Lake deal.

         Blackstone said that it would continue exploring a transaction only if Dell reimbursed it for its out-of-pocket due diligence expenses. To avoid inadvertently breaching the Merger Agreement, which would allow the Buyout Group to revoke its offer, the Committee sought Silver Lake's consent. Silver Lake agreed on the condition that it, too, receive payment for such expenses. The Committee agreed to reimburse both Blackstone and Silver Lake for up to $25 million of due diligence costs.

         Icahn sought the same arrangement for his firm while it was negotiating over a waiver of the limitations on deals with interested stockholders under 8 Del. C. § 203. Concerned that Icahn might become hostile, the Committee agreed to extend the same expense reimbursement to Icahn as long as he signed a standstill.[49]

         Mr. Dell did not let his initial alliance with Silver Lake impede his willingness to explore a future with Blackstone. An email from Mr. Dell to Blackstone from that period shows that Mr. Dell felt that Blackstone "substantially" agreed with his vision for the Company and that Mr. Dell was "open to considering all alternatives."[50] But Blackstone's actions also suggested that its interest was not founded-and that a deal would not hinge- on Mr. Dell's continued involvement in the Company: Reuters reported that Blackstone was reviewing candidates to replace him as CEO.[51]

         Blackstone charged David Johnson, who had just joined the PE firm from his job as Dell's head of acquisitions that January, with leading its diligence operation: more than 460 people combed through the virtual data room, and approximately forty Blackstone employees took over a Texas ballroom for additional on-the-ground diligence alongside twenty Dell employees. From Dell's side, Mr. Dell attested that he "spent more time with Blackstone than any of the other participants."[52] Overall, Dell's whole management team spent more time with Blackstone representatives than with those from any other prospective investor, including Silver Lake.

         But this diligence operation ultimately led Blackstone to back down. It withdrew from the bidding on April 18, 2013, and cited two key reasons for its decision: "(1) an unprecedented 14 percent market decline in PC volume in the first quarter of 2013, its steepest drop in history, and inconsistent with Management's projections for modest industry growth; and (2) the rapidly eroding financial profile of Dell."[53] For instance, Blackstone noted that, since Blackstone's initial bid on March 22, Dell revised its operating income projections downward by $700 million (from $3.7 billion to $3 billion).

         But Icahn remained interested and, on May 8, 2013, his firm teamed up with Cates's Southeastern to propose a modified recapitalization plan that would allow existing stockholders to keep their shares and have the option to choose to receive either (i) $12.00 in cash per share, or (ii) $12.00 worth of new shares of stock valued at $1.65 per share. Evercore did not think the Icahn-Southeastern plan could qualify as a Superior Proposal under the Merger Agreement given that it contemplated strictly a leveraged recapitalization.[54]

         Meanwhile, the Company's first quarter results for Fiscal 2014, released May 16, 2013, still failed to demonstrate that Dell's turnaround strategy had legs as net income fell 79% from the previous year, and GAAP earnings per share were down 81%. Bernstein Research highlighted that Dell's enterprise solutions and services segment had "woeful" margins, "well below industry peers."[55] The Company's CFO Brian Gladden did not object to that assessment and wrote in an email to Dell's senior leadership team that they needed to have "some very serious conversations . . . about the trajectory of the business and our growth/profitability plans. It's not apparent that the shift to growth will bring profit and cash in the short or long term . . . . We cannot support the current opex [operating expense] structure with these results."[56]

         i. Dueling Proposals Ahead of Stockholder Vote

         The Board arranged for a stockholder vote on the merger to occur at a special meeting on July 18, 2013. The definitive proxy statement filed May 31, 2013, explained that the Committee decided to recommend the transaction with Silver Lake as fair to unaffiliated stockholders because it involved, among other things: (i) the certainty of cash consideration; (ii) a 37% premium over the Company's ninety-day-average unaffected trading price of $9.97; and (iii) a 25% premium over its one-day unaffected trading price of $10.88.[57] In evaluating the transaction's fairness, the Committee "believ[ed] that the trading price of the Common Stock at any given time represent[ed] the best available indicator of the Company's going concern value at that time, so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction."[58]

         But Icahn was still in the hunt: he filed his preliminary proxy statement on June 6; disclosed on June 18 that he and affiliates had purchased seventy-two million shares from Southeastern at $13.52 per share; and advised Dell stockholders in writing on June 19 that he planned to nominate his own slate of directors who would scrap the transaction with the Buyout Group and instead launch a self-tender for 1.1 billion shares at $14 per share. Icahn vowed not to tender his shares. On July 1, Icahn revealed to the Committee and the Company's stockholders that lenders had committed $5.2 billion to finance the partial tender offer proposal.

         After the leading proxy advisory firms recommended that stockholders approve the MBO, Icahn revised his proposal on July 12 to add one warrant for every four shares tendered. Each warrant would entitle the holder for a period of seven years to purchase one share of the Company's common stock for $20.

         On July 17, the day before the vote, the Committee's proxy solicitor informed it that the Company's stockholders were unlikely to approve the merger. To avoid defeat, the Committee convened the meeting and adjourned it without holding a vote, affording the Buyout Group time to improve its proposal.

         The Buyout Group initially proposed adding $0.10 per share to the merger consideration in exchange for reducing the number of stockholders needed to approve the merger, from the majority of all unaffiliated stockholders to simply the majority of those unaffiliated stockholders present at the meeting or who vote by proxy. But the Committee rejected this adjustment on July 30, sending the Company's stock price down 2.55%.

         The next day, the Buyout Group sweetened the deal for lowering the threshold for approving the deal: in addition to the ten-cent bump that brought the merger consideration to $13.75, the Buyout Group promised a special cash dividend of $0.08 per share; vowed to pay a third-quarter dividend of $0.08 no matter the closing date; and agreed to accept a reduced termination fee of $180 million instead of $450 million if the stockholders rejected the merger in favor of a leveraged recapitalization or similar proposal in the next twelve months. After the Committee insisted that it would not accept the deal unless the special cash dividend increased to $0.13, the Buyout Group agreed, bringing the total value of the deal to $13.96 per share. (To finance the adjustment, Mr. Dell agreed to receive $12.51 instead of $13.36 for his rollover shares.)

         When the Committee met to evaluate the revised proposal on August 2, 2013, both Evercore and JPMorgan determined the $13.75 per share deal price to be fair to the unaffiliated stockholders. Following the Committee's advice, the Board approved the revised transaction (hereinafter, the "Merger") and amended the Merger Agreement to reflect the changed deal terms. A vote was scheduled for September 12, 2013.

         ii. Stockholder Vote

         At the special meeting held September 12, 2013, 57% of all Dell shares approved the Merger (70% of the shares present at the meeting). The Merger closed October 29, 2013, and the shares of non-dissenting Dell stockholders were converted into $13.75 per share in cash. Though Icahn and Southeastern initially indicated that they would seek appraisal if the Merger were approved, they withdrew their demands. However, holders of 38, 765, 130 shares of Dell common stock demanded appraisal.[59]

         D. The Appraisal Trial

         The four-day appraisal trial in October 2015 featured 1, 200 exhibits, seventeen depositions, live testimony from seven fact witnesses and five expert witnesses, a 542-paragraph-long pre-trial order, and 369 pages of pre- and post-trial briefing. Petitioners argued that, as demonstrated through their expert's DCF analysis, the fair value of the Company's common stock at the effective time of the Merger was actually $28.61 per share-more than double the deal price of $13.75. If this valuation were correct, the Buyout Group obtained Dell at a $26 billion discount to its actual value. In contrast, Dell maintained that its DCF analysis yielding a $12.68 per share valuation was a more appropriate approximation of fair value, but that, in light of the uncertainties facing the PC industry, fair value could be as high as the deal price (but not greater).

         E. The Court of Chancery's Determination of Fair Value

         The Court of Chancery acknowledged that "[t]he consideration that the buyer agrees to provide in the deal and that the seller agrees to accept is one form of market price data, which Delaware courts have long considered in appraisal proceedings."[60] However, the court believed that flaws in Dell's sale process meant that the deal price of $13.75 should not be afforded any weight here since it was "not the best evidence of [the Company's] fair value."[61] Accordingly, the trial court disregarded both Dell's pre-transactional stock price and the deal price entirely.

         The Court of Chancery identified three crucial problems with the pre-signing phase of the sale process that contributed to its decision to disregard the market-based indicators of value.

         First, the primary bidders were all financial sponsors who used an LBO pricing model to determine their bid prices-meaning that the per-share deal price needed to be low enough to facilitate an IRR of approximately 20%. As the court saw it, the prospective PE buyers, the Buyout Group, Mr. Dell, and the Committee never focused on determining the intrinsic value of the Company as a going concern.

         Second, the trial court believed that Dell's investors were overwhelmingly focused on short-term profit, and that this "investor myopia" created a valuation gap that purportedly distorted the original merger consideration of $13.65. Thus, under the Court of Chancery's logic, the efficient market hypothesis-which teaches that the price of a company's stock reflects all publicly available information as a consensus, per-share valuation-failed when it came to Dell, diminishing the probative value of the stock price. This phenomenon also allegedly depressed the deal price by anchoring deal negotiations at an improperly low starting point.[62]

         Third, the trial court concluded that there was no meaningful price competition during the pre-signing phase as, at any given time during the pre-signing phase, there were at most two private equity sponsors competing for the deal, creating little incentive to bid up the deal price. The trial court especially faulted the Committee for declining to reach out to potential strategic bidders, such as HP, during the pre-signing phase, leaving the financial sponsors who were engaged without the incentive "to push their prices upward to pre-empt potential interest from that direction."[63] According to the trial court, large private equity buyers such as those engaged here are notoriously averse to topping each other, and without the specter of a strategic buyer, the Committee lacked "the most powerful tool that a seller can use to extract a portion of the bidder's anticipated surplus"-the "threat of an alternative deal."[64]

         Next, the trial court evaluated the post-signing go-shop process, where it identified several additional issues that it believed further contributed to a deal price that fell short of fair value. Though two additional proposals to acquire the Company emerged during the go-shop period, from Blackstone and Icahn, the trial court dismissed their import given that these prospective buyers also operated within the "confines of the LBO model, " and that the deal price ultimately increased by just 2% over the original merger consideration of $13.65 per share as a result of this go-shop.

         Further, the trial court observed that the deal's structure as an MBO imposed several additional, supposedly insurmountable impediments to Dell's ability to prove at trial that the deal's "structure in fact generated a price that persuasively established the Company's fair value."[65] The trial court emphasized that, to prove a go-shop's worth, it is crucial to show that prospective rival bidders had a "realistic pathway to success" so as to justify the time, expense, and harm to professional relationships that might result from pursuing an offer.[66] Though the trial court recognized that the "relatively open" structure of the Committee's go-shop "raised fewer structural barriers than the norm, "[67] the court believed such openness could not obviate the issues imposed by features "endemic to MBO go-shops, " which "create a powerful disincentive for any competing bidder-and particularly competing financial bidders-to get involved."[68] These features include a so-called "winner's curse" and the management team's inherent value to the Company.[69]

         The concept of a "winner's curse" reflects the notion that "incumbent management has the best insight into the Company's value, or at least is perceived to have an informational advantage, " so if a financial buyer is willing to outspend management to win a deal, it must be overpaying because it must have overlooked some piece of information that dissuaded management from bidding as much.[70] Further, the trial court inferred that "Mr. Dell's unique value and his affiliation with the Buyout Group were negative factors that inhibited the effectiveness of the go-shop process, " [71] despite evidence that suggested that neither Blackstone nor Icahn-nor anyone else, for that matter-believed that Mr. Dell's continued involvement with the Company was essential. Moreover, Mr. Dell appeared willing to work with any viable party.[72]

         In light of these apparent flaws in the sale process, both pre- and post-signing, the trial court found that the Company failed to establish that "the sale process offers the most reliable evidence of the Company's value as a going concern."[73] Moreover, the Court of Chancery decided that "[b]ecause it is impossible to quantify the exact degree of the sale process mispricing, " it was going to discount the final merger consideration of $13.75 entirely-giving it no weight when determining fair value.[74]

         But, given that the trial court deemed it "illogical" to believe that another bidder would not have topped the Buyout Group's offer if the Company were actually worth the $28.61 per share advocated by the petitioners, [75] the Court of Chancery rejected petitioners' DCF and arrived at its "fair value" determination of $17.62 per share through its own DCF analysis, using a mix of the inputs proposed by the petitioners' and the Company's experts and adjustments of its own.

         F. This Appeal

         The Company argues that the trial court committed legal error and abused its discretion in failing to assign any weight to the deal price. On both fronts, the Company claims that the trial court erred by disregarding Section 262(h)'s requirement that it "take into account all relevant factors" in determining fair value.

         The Company articulates three reasons why it believes the trial court committed legal error. First, the Company argues that there is no requirement under Delaware law that the deal price be the "most reliable" or "best" evidence of fair value in order for it to be given any weight. Second, the Company posits that there is no requirement under Delaware law that the Court of Chancery disregard the deal price entirely if it cannot unequivocally quantify the precise amount of sale process mispricing. Third, the Company contends that the trial court erred in fashioning what seems akin to a bright-line rule that the deal prices in MBO transactions are distorted and should be disregarded. Dell states that imposing such a rule would be "inconsistent with the flexible nature of the appraisal inquiry."[76]

         Moreover, the Company notes that the trial court's conclusions underpinning its decision to disregard deal price do not follow from the facts as found. In particular, the Company maintains that the trial court lacked a basis for finding that: the market for Dell's stock was inefficient due to the alleged short-term focus of the Company's investor base, yielding a valuation gap between Dell's market value and its intrinsic value; the pre-signing phase lacked "meaningful price competition" because those involved in the sale process were fixated on determining a deal price that would generate the requisite IRR under the LBO model, and there were no strategic bidders involved; banks were reluctant to help finance the deal through debt, limiting the available leverage and therefore capping the deal price; the emergence of "topping bids" underscored the unfairness of the original merger consideration; and features endemic to MBO go-shops additionally distorted the relevance of the deal price. Thus, the Company argues that the trial court's entire reasoning for assigning no weight to the deal price was based either on flawed premises or on theoretical constructs that lack support in this factual record.

         The Company also argues that, even if the trial court had a sound factual basis for disregarding the deal price entirely, its DCF analysis is flawed in three crucial ways: (1) it does not properly account for the Company's FIN 48 contingent liability reserve because it deducts only $650 million instead of the actual $3.01 billion in the Company's financial statements; (2) it fails to deduct taxes that would be due on foreign earnings if repatriated even though the trial court counted these earnings in calculating free cash flow; and (3) it employs the wrong tax rate in calculating the terminal value, the 21% effective tax rate instead of the marginal tax rate of 35.8%.

         In response, the petitioners argue that the Court of Chancery did consider "all relevant factors"-including the deal price-in determining fair value as the Court of Chancery outlined a litany of reasons why the sale process distorted the deal price's worth as a proxy for fair value. Petitioners contend that the Company is itself the party advocating for an "inflexible bright-line rule" given that the Company seems to suggest that the Court of Chancery was required to "assign some mathematical weight to the deal price" in determining fair value.[77] The petitioners observe that this Court has previously rejected that formalism in light of the language of Section 262.

         The petitioners also cross-appeal and argue that the trial court's DCF analysis is flawed in two respects: (1) it wrongly accepts the adjustments to management projections advocated by the Company; and (2) it improperly includes two deductions, namely a working capital deduction of $3 billion (despite Dell's history of funding its operations through free cash flow) and $1.2 billion in restricted cash.

         II. Analysis

         We agree with petitioners that the trial court did consider all relevant factors presented, including Dell's stock price and deal price. But we reverse because the reasoning behind the trial court's decision to give no weight to any market-based measure of fair value runs counter to its own factual findings. After reviewing our appraisal statute and accompanying jurisprudence, we explore why the facts fail to support the Court of Chancery's reasoning for disregarding, in particular, the deal price. To the extent the trial court can justify giving any weight to its DCF analysis on remand, we conclude that, for the most part, the trial court did not abuse its discretion as to the asserted errors.

         A. The Relevant Legal Framework

         The General Assembly created the appraisal remedy in 1899 after amending the corporate code to allow a corporation to be sold upon the consent of a majority of stockholders instead of unanimous approval as was previously required.[78] Given that a single shareholder could no longer hold up the sale of a company, the General Assembly devised appraisal in service of the notion that "the stockholder is entitled to be paid for that which has been taken from him."[79] Stockholders who viewed the sale price as inadequate could seek "an independent judicial determination of the fair value of their shares" instead of accepting the per-share merger consideration.[80] There is one issue in an appraisal trial: "the value of the dissenting stockholder's stock."[81]

         Appraisals are odd. Unlike other cases, where one side loses if the other side fails to persuade the court that the evidence tilts its way, [82] appraisals require the court to determine a number representing the fair value of the shares after considering the trial presentations and submissions of parties who have starkly different objectives: petitioners contend fair value far exceeds the deal price, and the company argues that fair value is the deal price or lower. In reality, the burden "falls on the [trial] judge to determine fair value, using 'all relevant factors.'"[83]

         Though the appraisal remedy is "entirely a creature of statute, "[84] like most statutes, its specifics have been refined through years of judicial interpretation. Indeed, "fair value" has become a "jurisprudential, rather than purely economic, construct."[85]

         Importantly for our purposes here, Section 262 provides that the Court of Chancery "shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation" plus interest.[86] Equally critical is its requirement that, "[i]n determining such fair value, the Court shall take into account all relevant factors."[87] These provisions explain "what" the Court is valuing, and "how" the court should go about this task.

         i. "What" the Court is Valuing

         We have explained that the court's ultimate goal in an appraisal proceeding is to determine the "fair or intrinsic value" of each share on the closing date of the merger.[88] To reach this per-share valuation, the court should first envisage the entire pre-merger company as a "going concern, " as a standalone entity, and assess its value as such.[89] "[T]he corporation must be viewed as an on-going enterprise, occupying a particular market position in the light of future prospects."[90] The valuation should reflect the "'operative reality' of the company as of the time of the merger."[91]

         Because the court strives "to value the corporation itself, as distinguished from a specific fraction of its shares as they may exist in the hands of a particular shareholder, " the court should not apply a minority discount when there is a controlling stockholder. [92]Further, the court should exclude "any synergies or other value expected from the merger giving rise to the appraisal proceeding itself."[93]

         Then, once this total standalone value is determined, the court awards each petitioning stockholder his pro rata portion of this total-"his proportionate interest in [the] going concern"[94] plus interest.

         ii. "How" the Court Should Approach Valuation

         By instructing the court to "take into account all relevant factors" in determining fair value, the statute requires the Court of Chancery to give fair consideration to "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court."[95] Given that "[e]very company is different; every merger is different, "[96] the appraisal endeavor is "by design, a flexible process."[97]

         This Court has relied on the statutory requirement that the Court of Chancery consider "all relevant factors" to reject requests for the adoption of a presumption that the deal price reflects fair value if certain preconditions are met, such as when the merger is the product of arm's-length negotiation and a robust, non-conflicted market check, and where bidders had full information and few, if any, barriers to bid for the deal.[98] In Golden Telecom, we explained that Section 262(h) is "unambiguous[]" in its command that the Court of Chancery undertake an "independent" assessment of fair value, and that the statute "vests the Chancellor and Vice Chancellors with significant discretion to consider 'all relevant factors' and determine the going concern value of the underlying company."[99] In DFC, we again rejected an invitation to create a presumption in favor of the deal price.[100]Even aside from the statutory command to consider all relevant factors, we doubted our ability to craft the precise preconditions for invoking such a presumption.[101]

         As such, "the trial of an appraisal case under the Delaware General Corporation Law presents unique challenges to the judicial factfinder."[102] And this task is complicated by "the clash of contrary, and often antagonistic, expert opinions of value, " prompting the trial court to wade through "widely divergent views reflecting partisan positions" in arriving at its determination of a single number for fair value.[103]

         In the end, after this analysis of the relevant factors, "[i]n some cases, it may be that a single valuation metric is the most reliable evidence of fair value and that giving weight to another factor will do nothing but distort that best estimate. In other cases, it may be necessary to consider two or more factors."[104] Or, in still others, the court might apportion weight among a variety of methodologies. But, whatever route it chooses, the trial court must justify its methodology (or methodologies) according to the facts of the case and relevant, accepted financial principles.[105]

         Given the human element in the appraisal inquiry-where the factfinder is asked to choose between two competing, seemingly plausible valuation perspectives, forge its own, or apportion weight among a variety of methodologies-it is possible that a factfinder, even the same factfinder, could reach different valuation conclusions on the same set of facts if presented differently at trial.[106] There may be no perfect methodology for arriving at fair value for a given set of facts, and the Court of Chancery's conclusions will be upheld if they follow logically from those facts and are grounded in relevant, accepted financial principles.[107] "To be sure, "fair value" does not equal "best value."[108]

         B. The Court of Chancery's Reasons for Disregarding Deal Price Do Not Follow from the Record

         The Company recasts the Court of Chancery's fair value opinion as creating several bright-line rules, including that the court must assign no weight to the deal price if: (i) it is not the "best" evidence of fair value; (ii) the court cannot "quantify the exact degree of the sale process mispricing"; or (iii) the transaction is an MBO. And the Company argues that each such rule is flawed. Setting aside whether the Court of Chancery's opinion actually purports to assert these more generalized propositions, we agree with the Company's core premise that, on this particular record, the trial court erred in not assigning any mathematical weight to the deal price. In fact, the record as distilled by the trial court suggests that the deal price deserved heavy, if not dispositive, weight.

         On the other hand, we also agree with the petitioners that there is no requirement that the court assign some mathematical weight to the deal price, and that the court fulfilled its statutory obligation to take into account the deal price. The trial court's thorough examination of Dell's stock market dynamics and sale process demonstrates its consideration of these factors. But we reverse because there is a dissonance between the key underpinnings of the decision to disregard the deal price and the facts as found, and this dissonance distorted the trial court's analysis of fair value.

         The three central premises that the Court of Chancery relied upon to assign no weight to the deal price were flawed. First, the court believed that a "valuation gap" existed between Dell's stock price and the Company's intrinsic value, and this conclusion- contrary to the efficient market hypothesis-led it to hypothesize that the bidding over Dell as a company was anchored at an artificially low price that depressed the ultimate deal price below fair value. Second, the court suggested that the lack of strategic buyers in the sale process-and, accordingly, the involvement of only private equity bidders-also pushed the deal price below fair value. Third, the court concluded that several factors endemic to MBO go-shops further undercut the deal price's credibility. We consider each of these premises in turn and find them untenable in view of the Court of Chancery's own findings of fact as considered in light of established principles of corporate finance. Without these premises, the trial court's support for disregarding the deal price collapses. Accordingly, the trial court's reliance on them as a basis for granting no weight to the market-based indicators of value constituted an abuse of discretion meriting reversal.[109]

         i. The Trial Court Lacked a Valid Basis for Finding a "Valuation Gap" Between Dell's Market and Fundamental Values

         The Court of Chancery presumed "investor myopia" and hangover from the Company's "nearly $14 billion investment in its transformation, which had not yet begun to generate the anticipated results" produced a "valuation gap" between Dell's fundamental and market prices. That presumption contributed to the trial court's decision to assign no weight to Dell's stock price or deal price.[110] The trial court believed that short-sighted analysts and traders impounded an inadequate-and lowball-assessment of all publicly available information into Dell's stock price, diminishing its worth as a valuation tool.[111]But the record shows just the opposite: analysts scrutinized Dell's long-range outlook when evaluating the Company and setting price targets, and the market was capable of accounting for Dell's recent mergers and acquisitions and their prospects in its valuation of the Company.[112]

         Further, the Court of Chancery's analysis ignored the efficient market hypothesis long endorsed by this Court. It teaches that the price produced by an efficient market is generally a more reliable assessment of fair value than the view of a single analyst, especially an expert witness who caters her valuation to the litigation imperatives of a well-heeled client.[113]

         A market is more likely efficient, or semi-strong efficient, if it has many stockholders; no controlling stockholder; "highly active trading"; and if information about the company is widely available and easily disseminated to the market.[114] In such circumstances, a company's stock price "reflects the judgments of many stockholders about the company's future prospects, based on public filings, industry information, and research conducted by equity analysts."[115] In these circumstances, a mass of investors quickly digests all publicly available information about a company, and in trading the company's stock, recalibrates its price to reflect the market's adjusted, consensus valuation of the company.[116]

         The record before us provides no rational, factual basis for such a "valuation gap." Indeed, the trial court did not indicate that Dell lacked a vast and diffuse base of public stockholders, that information about the Company was sparse or restricted, that there was not an active trading market for Dell's shares, or that Dell had a controlling stockholder- or that the market for its stock lacked any of the hallmarks of an efficient market. In fact, the record shows that Dell had a deep public float, [117] was covered by over thirty equity analysts in 2012, [118] boasted 145 market makers, [119] was actively traded with over 5% of shares changing hands each week, [120] and lacked a controlling stockholder.[121] As noted in the expert reports, Dell's stock price had a track record of reacting to developments concerning the Company. For example, the stock climbed 13% on the day the Bloomberg first reported on Dell's talks of going private.[122]

         Further, the trial court expressly found no evidence that information failed to flow freely or that management purposefully tempered investors' expectations for the Company so that it could eventually take over the Company at a fire-sale price, as in situations where long-term investments actually led to such valuation gaps.[123] In fact, Mr. Dell tried to persuade investors to envision an enterprise solutions and services business enjoying double-digit sales growth and which would more than compensate for any decline in end-user computing.[124] And he pitched this plan for a "prolonged" period, approaching nearly three years.[125]

         There is also no evidence in the record that investors were "myopic" or shortsighted. Rather, the record shows analysts understood Dell's long-term plans.[126] But they just weren't buying Mr. Dell's story:

• "Though Dell may have an advantage in the near term with its new next-gen 12G servers, we believe over the longer run, incremental shares gain in the x86 market will likely be limited. As such, we expect Dell's server business to grow roughly in line with the market." (Wells Fargo, June 27, 2012, at A3429)
• "Top-tier OEMs continued to lose market share to white-box vendors, shedding 85 basis points of revenue share at 111 points of unit share [year-over-year]. As we have mentioned before, in the longer term we expect that this dynamic will continue, further pressuring x86 units and revenues for top-tier OEMs, while adding further forces of commoditization across the x86 server market." (Goldman Sachs, Sept. 10, 2012, at A3429)
• "While the company remains optimistic that recent enhancements to its storage portfolio could rekindle growth when demand improves, Dell's slowing momentum here remains a factor to watch." (Goldman Sachs, Nov. 16, 2012, at A3430)
• "We see risks for Dell including cyclical global PC and enterprise IT markets, including slowing in mature geographies, combined with competitive pricing and margin pressures from both large systems peers and aggressive commodity suppliers. PC unit and margin risks also include underlying dynamics in volume component supply." (Evercore, Nov. 16, 2012, at A3430)
• "While we acknowledge Dell's enterprise strategy, we still have concerns around whether it can ramp fast enough to offset pressures in PC-related businesses, including PC support and related sales of peripherals." (Barclays, Dec. 3, 2012, at A3430)

         The Court of Chancery's myopia theory also overlooks that, at an earlier stage in its history, Dell was a growth stock trading at large multiples to its then-current cash flow.[127]That is, for much of its history, analysts bought Mr. Dell's long-term vision. But, by the early years of the second decade of the 21st century, they were no longer doing so.[128]

         Further, the prospective bidders who later reviewed Dell's confidential information all dropped out due to their considerable discomfort with the future of the PC market. The record simply does not support the Court of Chancery's favoring of management's optimism over the public analysts' and investors' skepticism-especially in the face of management's track record of missing its own projections.[129] (Even Mr. Dell doubted his management team's forecasting abilities and conceded at trial, "We're not very good at forecasting.")[130] And the Court of Chancery does not justify why it chose to do so. In short, the record does not adequately support the Court of Chancery's conclusion that the market for Dell's stock was inefficient and that a valuation gap in the Company's market trading price existed in advance of the lengthy market check, an error that contributed to the trial court's decision to disregard the deal price.[131]

         ii. The Lack of Strategic Bidders Is Not a Credible Reason for Disregarding the Deal Price

         The trial court's complete discounting of the deal price due to financial sponsors' focus on obtaining a desirable IRR and not "fair value" was also error. Although the trial court did not have the benefit of our opinion in DFC, we rejected this view there and do so again here given we see "no rational connection" between a buyer's status as a financial sponsor and the question of whether the deal price is a fair price.[132] After all, "all disciplined buyers, both strategic and financial, have internal rates of return that they expect in exchange for taking on the large risk of a merger, or for that matter, any sizeable investment of its capital."[133]

         We found in DFC that the notion of a "private equity carve out" stood on especially shaky footing where other objective indicia suggested the deal price was a fair price.[134]Such objective factors in DFC included that "every logical buyer" was canvassed, and all but the buyer refused to pursue the company when given the opportunity; concerns about the company's long-term viability (and its long-term debt's placement on negative credit watch) prevented lenders from extending debt; and the company repeatedly underperformed its projections.[135]

         Here, it is clear that Dell's sale process bore many of the same objective indicia of reliability that we found persuasive enough to diminish the resonance of any private equity carve out or similar such theory in DFC. For example, JPMorgan and Evercore choreographed the sale process to involve competition with Silver Lake at every stage, both pre-signing and during the go-shop. When KKR walked, TPG, another major-league PE buyer, was introduced. And both KKR and TPG demurred for many of the objective reasons that the stock market-and, later, Blackstone-doubted Dell's ability to transform itself and become more profitable.

         Moreover, JPMorgan did not initially solicit the interest of strategic bidders because its analysis suggested none was likely to make an offer.[136] Further, given leaks that Dell was exploring strategic alternatives, record testimony suggests that Evercore presumed that any interested parties would have approached the Company before the go-shop if serious about pursuing a deal.[137]

         The Committee, composed of independent, experienced directors and armed with the power to say "no, " persuaded Silver Lake to raise its bid six times. Nothing in the record suggests that increased competition would have produced a better result. JPMorgan also reasoned that any other financial sponsor would have bid in the same ballpark as Silver Lake.[138]

         The bankers canvassed the interest of sixty-seven parties, including twenty possible strategic acquirers during the go-shop. The go-shop's forty-five-day window afforded potential bidders enough time to decide whether to continue to explore a transaction by submitting a non-binding indication of interest that qualified as a "Superior Proposal, " which accordingly would lower the termination fee from $450 million to $180 million thanks to "Excluded Party" status and give that party months to scrutinize the Company's finances and growth prospects. The trial court acknowledged, "the steps to become an 'Excluded Party' were also relatively few."[139] And the court even endorsed the go-shop's overall design as "rais[ing] fewer structural barriers than the norm" and both "relatively open" and "relatively flexible."[140] Further, Evercore's compensation was "tied directly to the success of the go-shop, " incentivizing it to make the go-shop as effective as possible.[141]

         The likeliest strategic bidder, HP, signed a confidentiality agreement during the go-shop, but it did not even log into the data room. Three parties signed non-binding initial expressions of interest: Blackstone, Icahn, and GE Capital.[142] Yet, despite the quality of the go-shop's design, the Court of Chancery believed that, given Dell's complexity as a company, "the magnitude of the task" of conducting diligence on it might have had "a chilling effect on other parties, " without citing any evidence that any other party would have been interested.[143] Regardless, interested parties did not need to complete diligence within the go-shop's forty-five-day window.

         The Court of Chancery stressed its view that the lack of competition from a strategic buyer lowered the relevance of the deal price. But its assessment that more bidders-both strategic and financial-should have been involved assumes there was some party interested in proceeding. Nothing in the record indicates that was the case. Fair value entails at minimum a price some buyer is willing to pay-not a price at which no class of buyers in the market would pay.[144] The Court of Chancery ignored an important reality: if a company is one that no strategic buyer is interested in buying, it does not suggest a higher value, but a lower one. "[O]ne should have little confidence she can be the special one able to outwit the larger universe of equally avid capitalists with an incentive to reap rewards by buying the asset if it is too cheaply priced."[145]

         The magnitude of a potential Dell deal narrowed the class of prospective buyers even further-to the largest PE firms such as KKR, TPG, and Blackstone-though the trial court did not cite persuasive evidence in the record that this diminished the relevance of the deal price. In fact, Blackstone proved a formidable check on the fair value of the Silver Lake deal given Blackstone's expenditure of resources on the project and ostensible willingness to do a deal if worthwhile. After submitting an initial proposal and gaining Excluded Party status during the go-shop, Blackstone spent nearly a month evaluating the Company, involving over 460 of its employees in diligence via the virtual data room and in a ballroom in Texas for in-person diligence with Dell employees. Dell agreed to ...

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