This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
A few years ago, the conventional wisdom among deal lawyers was that appraisal was dying. The hedge funds that had built a cottage industry out of buying into announced public mergers and then demanding statutory fair value had been beaten back, hard, by a run of Delaware Supreme Court decisions that told the Court of Chancery to trust the deal price. The trade got less profitable, the funds moved on, and the appraisal petition started to feel like a relic of a more litigious decade.
That obituary was half right. Delaware appraisal rights in a private company did not die; the public-market arbitrage play did. The remedy itself migrated. The place it is alive and genuinely dangerous in 2026 is the closely held merger, where there is no public trading price, no market check, and frequently a minority holder who feels cashed out at a number the controller picked. If you are advising a founder-controlled company through a sale or a squeeze-out, the appraisal risk on your own cap table is higher today than the headlines about appraisal’s death would suggest.
Why the public-deal arbitrage dried up
The doctrinal story is worth getting precise, because the reason public appraisal faded is exactly the reason private appraisal persists. Delaware’s appraisal statute, 8 Del. C. § 262, entitles a stockholder who dissents from a qualifying merger to have the Court of Chancery determine the “fair value” of their shares, exclusive of any value arising from the merger itself. For years, petitioners argued that fair value could run well above the negotiated deal price.
Then came the trilogy. In DFC Global (2017) and Dell (2017), the Supreme Court told Chancery that a price produced by a robust, arm’s-length, well-shopped sale process deserves heavy — sometimes dispositive — weight as evidence of fair value. In Aruba Networks (2019), the Court went further and effectively endorsed deal price minus synergies as the fair-value measure in a clean third-party deal. The market absorbed the lesson quickly: if the merger price is going to be treated as the best evidence of value, there is no arbitrage in betting that a judge will find something higher. The petitions thinned out.
But read what those cases actually rest on. Every one of them turns on the existence of a reliable market signal — a competitive process, a deep public float, multiple bidders, an unconflicted board running an auction. The deference is to the process, not to the label “deal price.” Take the market signal away and the entire foundation of the deference disappears.
Why Delaware appraisal rights in a private company are the opposite of Aruba
Now picture the typical private-company exit on a founder-controlled cap table. There was no auction; the controller negotiated with one buyer, or rolled the company into a structure the controller already favored. There is no public float and no trading price to anchor on. The minority holders — early employees, a friends-and-family round, a small fund that took a board observer seat — are being cashed out at a per-share number that the controlling stockholder had every incentive to keep low. There is no synergies-adjusted market price to subtract, because there was never a market.
That is the fact pattern in which Chancery has every reason to roll up its sleeves and run its own valuation. The deal-price deference of DFC, Dell, and Aruba was a response to good process. Where the process is conflicted and closed, the court is back to a discounted-cash-flow analysis, comparable-companies work, and a genuine judicial determination of fair value — the very exercise the public-deal trilogy was trying to avoid. A founder-controller who assumes appraisal is dead because the hedge funds left the building is reading the wrong half of the case law.
What this means for how you structure the deal
The doctrine implies specific drafting and structuring choices, and this is where founder-side counsel earns the fee. The goal is to manufacture, as best you can, the market signal that the appraisal-deference cases reward — or to remove the dissenters’ standing to claim it.
First, build a record of process even when you do not strictly need one. A controller-led squeeze-out does not require an auction, but a documented effort to test value — an outreach to alternative buyers, a contemporaneous third-party valuation, a special committee with real bargaining authority — is the evidentiary spine that lets you argue your price was fair value. The same special-committee machinery that does fiduciary work under the controller-transaction cases doubles as appraisal defense, because it generates the process the valuation cases respect. This is one of those places where governance discipline and litigation defense are the same project.
Second, understand the statute’s own escape hatches and gating rules. Section 262 does not grant appraisal in every deal; the market-out exception historically turned on whether stock was publicly listed, and the statute conditions the remedy on strict procedural compliance by the dissenter — a written demand before the vote, no vote in favor, continuous holding. Recent amendments to § 262 have also adjusted the mechanics around who may demand and how beneficial holders perfect. The same precision matters on the consent side: the DGCL § 228 written-consent notice window and closing timing dictate when a dissenter’s clock starts and whether the demand was made before the vote. Counsel who knows exactly which holders have a perfected claim, and which have already forfeited it through a consent or a drag, can size the real exposure rather than the theoretical one.
Third, take the drag-along and the stockholder consents seriously as appraisal tools, not just voting tools. A properly drafted drag-along that requires the dragged holders to waive appraisal, paired with a written-consent process that satisfies the statute’s notice requirements, can extinguish the dissent before it ripens. The failure mode I see is a founder relying on an old charter or stockholders’ agreement whose drag and waiver language predates the current deal and does not actually bind the holders who matter. The merger structure and the equity documents have to be read together, before signing, with appraisal specifically in mind.
The takeaway for 2026
The lesson of the appraisal decade is not that the remedy is dead. It is that appraisal follows the absence of a market. Where the market is thick and the process is clean, the deal price wins and there is nothing to litigate. Where the market is nonexistent and the process is controlled — which describes most founder-led private exits — the court will do its own valuation, and a dissenting minority holder has a real, fundable claim.
So the practical instruction is to stop treating appraisal as a public-company problem you read about in the trade press and start treating it as a cap-table problem you can see by name. Identify the holders who could dissent, confirm whether their appraisal rights are perfected or waived, and build the process record that makes your price defensible as fair value. Do that work at signing, and the appraisal petition becomes a manageable risk. Skip it because someone told you appraisal died with the hedge funds, and you may meet it again in a Chancery valuation trial where the deal price gets no deference at all.
If you are structuring a controller-led or minority-squeeze-out merger and want a second read on the appraisal exposure sitting in your cap table, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
