Director Duties in M&A Transactions: What Every Board Should Know

Mergers and acquisitions (M&A) represent pivotal moments in a corporation’s life cycle. Directors play a critical role in ensuring these complex transactions serve the long-term interests of the company and its stakeholders.

Fiduciary Duties During M&A

Directors must continue to uphold their fiduciary duties—particularly loyalty and care—throughout an M&A process. This includes:

• Evaluating offers objectively and without personal bias
• Ensuring proper due diligence is conducted
• Seeking fair value for the corporation’s shareholders
• Disclosing conflicts of interest and abstaining when appropriate

Best Practices for M&A Oversight

• Engage independent advisors such as investment bankers or legal counsel
• Review all transaction documents thoroughly
• Consider alternative transactions that may better serve corporate interests
• Document the decision-making process through comprehensive board minutes

Duty to Seek Shareholder Value

Directors must ensure that any M&A transaction is aligned with maximizing long-term value for the corporation and its shareholders—not simply short-term gains or defensive tactics.

Key Considerations

• Is the transaction in the best interest of the corporation?
• Were all options considered and properly vetted?
• Are any directors conflicted or influenced by personal interests?