Professor Stephen Bainbridge, one of the nation’s leading corporate scholars, often cited by Delaware courts, has announced his most recent scholarship on the duties of directors when a company is for sale, based on the seminal Delaware Supreme Court decision in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), and its progeny. The good professor also explains a rather new medium for his legal scholarship, entitled: Directors as Auctioneers: A Concise Guide to Revlon-Land, in his post available here, parts of which follow:
I’ve just published Directors as Auctioneers: A Concise Guide to Revlon-Land as an eBook available at Amazon’s Kindle store.
What’s the book about? In Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), the Delaware Supreme Court explained that when a target board of directors enters Revlon-land, the board’s role changes from that of “defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company.”
Unfortunately, the Court’s colorful metaphor obfuscated some serious doctrinal problems. What standards of judicial review applied to director conduct outside the borders of Revlon-land? What standard applied to director conduct falling inside Revlon-land’s borders? And when did one enter that mysterious country?
By the mid-1990s, the Delaware Supreme Court had worked out a credible set of answers to those questions. The seemingly settled rules made doctrinal sense and were sound from a policy perspective.
Indeed, my thesis herein is that Revlon and its progeny should be praised for having grappled—mostly successfully—with the core problem of corporation law: the tension between authority and accountability
Professor Larry Ribstein, on the the nation’s foremost authorities on alternative entities, and also cited in Delaware court opinions, comments on Professor Bainbridge’s new work in a post available here, and excerpted below:
Steve Bainbridge is offering his new book, Directors as Auctioneers: A Concise Guide to Revlon-Land, as a Kindle eBook. Here’s his discussion of the book and of his decision to go the e-book route. I’ve bought it already and presumably will have it when I turn my Kindle on.
Steve’s reasoning is plausible: he gets more money than for law review articles, controls the marketing and price, and keeps all the proceeds instead of just royalties. He doesn’t get any quality signal, but at his career stage doesn’t need another one. His Revlon book offers him an opportunity to “update, expand, and augment older work on Revlon and offer up a new and improved analysis in a different package” that provides analysis relevant to some recent Delaware decisions.
I would add that the format provides a marginal incentive that could produce scholarship that might not otherwise get produced. This is what markets are supposed to do.
Needless to say, I’m interested in how this works out for Steve. Given rapid developments in publishing, I expect that this is just the first stage of an interesting evolutionary process.