CHAPTER 9
Can the Board Avoid the Synergy Trap?
Tools for the Board
Directors have the primary fiduciary duties of loyalty and care in fulfilling their responsibilities. The duty of care asks whether they have acted as “ordinary and prudent people would act under similar circumstances.” Boards are routinely given a board book that reviews the strategy and valuation of the deal that management is promoting, and directors will certainly ask several questions based on the information they are given. But are they asking the right questions or having the right discussions, given that so many bad deals make it out of the boardroom?1
Although acquiring boards are protected by the broad protections of the business judgment rule, what if directors ...
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