Delaware Chancery Court Addresses (In)Applicability of Control Premium in GPC Method

Chancellor McCormick of the Delaware Court of Chancery (the “Court”) issued an appraisal opinion that discussed the application of the guideline public company method (“GPC”). For the first time in nearly two decades, the Court directly addressed the applicability (or inapplicability) of a control premium to the GPC method, specifically declining to apply a control premium for the reasons set forth in her opinion and described herein. The main takeaway for appraisers is that if she/he applies a control premium to the GPC method in the Court (and potentially elsewhere), she/he must (i) provide reasoning as to why share prices of the selected GPCs suffer from a discount for lack of control and (ii) provide sufficient support in the selection of a control premium.