Is a shareholder who dissents to the sale of a business stuck with the terms of the sale as the measure of the fair value of their interest? That seems to be effect of an appellate division opinion affirming a trial court’s decision to apply the business judgment rule in deciding that the “arms length” transaction on which the dissenter’s payment was based was a fair measure of the company’s value.
But there is a potential flaw lurking in the court’s reasoning, one that could haunt future shareholders who refuse to go along with a plan to sell a closely held business. If the court is going to defer to the majority’s judgment under the business judgment rule, as this trial court did, is it really applying an objective fair value standard? Seems to me that the answer is no, and the appellate court made a mistake.