In re EngageSmart, Inc. Stockholder Litigation

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE ENGAGESMART, INC. ) C.A. No. 2023-1093-JTL
STOCKHOLDER LITIGATION )

OPINION REGARDING MOTIONS TO DISMISS

Date Submitted: November 13, 2025
Date Decided: February 27, 2026

Ned Weinberger, Mark Richardson, Jiahui (Rose) Wang, LABATON KELLER
SUCHAROW LLP, Wilmington, Delaware; Kimberly A. Evans, Lindsay K. Faccenda,
Irene Lax, Daniel M. Baker, Robert Erikson, BLOCK & LEVITON LLP, Wilmington,
Delaware; Guillaume Buell, John Vielandi, Joshua M. Glasser, LABATON KELLER
SUCHAROW LLP, New York, New York; Jason Leviton, Nathan Abelman, BLOCK
& LEVITON LLP, Boston, Massachusetts; Jeremy Friedman, David Tejtel,
Christopher M. Windover, David A. Rosenfeld, FRIEDMAN OSTER & TEJTEL
PLLC, Bedford Hills, New York; Douglas E. Julie, W. Scott Holleman, JULIE &
HOLLEMAN LLP, New York, New York; Attorneys for Lead Plaintiffs Genessee
County Employees’ Retirement System and Morabito Living Revocable Trust DTD
5/29/2015, and Additional Plaintiff Anthony Franchi.

A. Thompson Bayliss, April M. Ferraro, Ben Lucy, ABRAMS & BAYLISS LLP,
Wilmington, Delaware; Stefan Atkinson, John P. Del Monaco, Sarah Schultes,
KIRKLAND & ELLIS LLP, New York, New York; Attorneys for Defendants
EngageSmart, Inc., Vista Equity Partners Management, LLC, Vista Equity Partners
Fund VIII, L.P., Vista Equity Partners Fund VIII-A, L.P., Vista Equity Partners Fund
VIII GP, L.P., VEPF VIII GP, LLC, Icefall Merger Sub, Inc., and Icefall Parent, LLC.

Daniel A. Mason, Sabrina M. Hendershot, PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP, Wilmington, Delaware; Andrew G. Gordon, PAUL, WEISS,
RIFKIND, WHARTON & GARRISON LLP, New York, New York; Lina Dagnew,
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, Washington, District of
Columbia; Attorneys for Defendants General Atlantic, L.P., General Atlantic (IC),
L.P., General Atlantic (IC) SPV, L.P., David Mangum, Preston McKenzie, Raph
Osnoss, and Paul G. Stamas.

Srinivas M. Raju, Matthew W. Murphy, Kevin M. Kidwell, Elizabeth J. Freud,
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Attorneys for
Defendants Robert Bennett and Deborah Dunnam.
Joseph O. Larkin, Cliff C. Gardner, Nicole A. DiSalvo, Louis K. Tiemann, SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; Attorneys for
Defendants Matthew Hamilton and Diego Rodriguez.

Stephen C. Norman, Jaclyn C. Levy, Callan R. Jackson, POTTER ANDERSON &
CORROON LLP, Wilmington, Delaware; David B. Hennes, Lisa H. Bebchick, ROPES
& GRAY LLP, New York, New York; Mark S. Gaioni, ROPES & GRAY LLP, Los
Angeles, California; Sarah M. Samaha, ROPES & GRAY LLP, Washington, District
of Columbia; Phillip Z. Yao, ROPES & GRAY LLP, Boston, Massachusetts; Attorneys
for Defendant Goldman Sachs & Co. LLC.

LASTER, V.C.
A private equity firm acquired a controlling interest in a software company. It

secured governance rights, including director nomination rights. Half of the board

comprised the controller’s nominees.

Two years passed. Needing liquidity, the controller approached another

private equity firm about buying part of its stake and potentially taking out the public

minority.

Anticipating a proposal, the board set up a special committee. After signing an

NDA and receiving due diligence, the favored buyer hesitated. The special committee

went into hibernation.

Ten months later, the favored buyer returned. The board reactivated the

special committee. The controller delivered an MFW letter and told the board it would

only consider selling a minority stake.

The controller and its longtime financial advisor, now representing the

company, led the bidder outreach. They told bidders that the controller would only

consider selling a minority stake. The bid letter asked for proposals that included a

special distribution to the controller.

The company received several first-round bids for a minority stake. The

company’s financial advisor then gave the favored buyer a price tip that helped shape

its proposal. The company told all of the interested parties that it would entertain

second-round bids.

A few weeks later, the favored buyer made a surprise control bid. It proposed

to acquire 60% of the company, including the public shares. The controller would sell
part of its shares into the offer and roll over the rest. The favored buyer told the

company that it would not consider purchasing a minority stake.

The controller asked the special committee if it could negotiate price and

governance terms concurrently with the potential buyer. The governance terms

included liquidity rights. The special committee agreed.

What emerged from those negotiations was a $4 billion take-private

transaction that the special committee, the board, and the stockholders approved.

The favored buyer cashed out the company’s public stockholders for $23 per share

and ended up owning 65% of the company. The controller sold some of its shares to

the favored buyer at the same price the public received. The controller rolled over the

rest in return for a 35% post-transaction stake. The controller also received $500

million in the form of an undisclosed post-closing dividend on its rolled-over shares.

This action followed. The plaintiffs represent a putative class of former public

stockholders. They allege that the controller and the directors breached their

fiduciary duties by negotiating and approving a transaction that was unfair to the

public minority. They also claim that the fiduciaries breached their duty of disclosure.

They further contend that the company’s financial advisor and the favored buyer

aided and abetted the sell-side breaches of duty.

Five groups of defendants briefed motions to dismiss. All claim that the

transaction complied with MFW’s requirements, warranting dismissal. This decision

rejects the defendants’ pleading-stage invocation of MFW because the complaint

alleges facts making it reasonably conceivable that the stockholder vote was not fully

2
informed. Entire fairness becomes the operative standard of review, and the

defendants do not argue for dismissal under that standard.

Separately, the CEO, two special committee members, and another director

seek dismissal on the basis of exculpation. The CEO, one special committee member,

and the other director face potential liability for non-exculpated claims. One special

committee member only faces care claims and is entitled to dismissal.

Finally, the complaint states a claim for aiding and abetting breaches of

fiduciary duty against the company’s financial advisor. The complaint fails to state

an aiding and abetting claim against the favored buyer.

I. FACTUAL BACKGROUND

The facts are drawn from the amended complaint (the “Complaint”),

documents the Complaint incorporates by reference, and documents subject to

judicial notice.1 At this procedural stage, the court must credit the Complaint’s well-

pled allegations and draw all reasonable inferences in the plaintiffs’ favor.

A. The Company

In 2009, Robert Bennett founded InvoiceCloud (the “Company”), an electronic

payments and billing processor. Bennett served as CEO.

1 Citations in the form “Compl. ¶ ___” refer to paragraphs of the Complaint,

which is the operative pleading. Dkt. 72. Citations in the form “Ex. ___ at ___” refer
to exhibits to the transmittal affidavit of Ben Lucy, which collects documents that are
incorporated by reference in the Complaint or that are subject to judicial notice. Dkt.
127. Page references cite to internal pagination whenever possible.

3
In 2015, private equity firm Summit Partners purchased a stake in the

Company. Summit’s investment gave it the right to appoint one member of the board

of directors (the “Board”). Summit appointed Matthew Hamilton, one of its managing

directors.

In 2018, General Atlantic, another private equity firm, acquired a controlling

interest in the Company. General Atlantic has also invested in other Summit-backed

companies, and the two firms have a long history of partnering on investments.

In 2020, the Company rebranded as EngageSmart. It went public in 2021 in

an IPO priced at $26 per share. After the IPO, General Atlantic controlled

approximately 60% of the Company’s voting power. General Atlantic, Summit, and

the Company executed a governance agreement that cemented General Atlantic’s

control (the “Governance Agreement”). The Governance Agreement authorized

General Atlantic to (i) designate five of the Company’s eight directors, including the

Board chair; (ii) designate one member of each Board committee; (iii) remove directors

by majority Board vote (!); and (iv) block most major corporate actions through

granular pre-approval requirements. The Governance Agreement preserved

Summit’s right to nominate one director.

At the time of the challenged transaction, General Atlantic had four designees

on the Board: Board chair Paul Stamas, Ralph Osnoss, David Mangum, and Preston

McKenzie. Each worked at General Atlantic: Stamas was a managing director and

Global Co-Head of Financial Services, Osnoss was a managing director, Mangum was

a Senior Advisor, and McKenzie was an Operating Partner.

4
Consistent with the Governance Agreement, General Atlantic had a fifth

director on the Board—Ashley Glover—until she resigned on November 9, 2021. After

her departure, General Atlantic did not formally designate a fifth director. General

Atlantic recommended Deborah Dunnam for consideration but did not formally

designate Dunnam as one of its nominees under the Governance Agreement. She

joined the Board in 2021. Goldman Sachs, General Atlantic’s longtime financial

advisor, proposed Diego Rodriguez as a director, and he joined the Board in 2022.

Once again, General Atlantic did not formally designate Rodriguez as one of its

designees.

At this stage of the case, it is not clear why General Atlantic proceeded in this

fashion. One possibility is that General Atlantic was looking ahead to a transaction

that might be challenged and liked the optics of having two directors that it had not

designated.

The two remaining directors were Bennett (the Company’s CEO) and Hamilton

(from Summit).

B. General Atlantic’s Need For Liquidity

By early 2022, the General Atlantic funds holding its investment in the

Company were nearing the end of their ten-year lifecycles. Some of the limited

partners were pressing to get their capital back. General Atlantic needed liquidity.

On March 31, 2022, Stamas met with Jeff Wilson, the managing director of

Vista Equity Partners (“Vista”), another private equity firm. After the meeting,

5
Stamas reported to Bennett that Vista wanted to start a dialog about the Company.

Wilson met with Bennett in late April. No one disclosed those meetings to the Board.

Stamas and Bennett asked Goldman to present at the Board’s May 3, 2022

meeting on “liquidity for shareholders.”2 During the meeting, Goldman discussed the

gap between the Company’s stock price and its strong financial performance.

Goldman proposed several strategic alternatives but did not suggest a take-private

transaction.

Meanwhile, Vista evaluated the Company and concluded that it was an “A

asset” with potential for further growth that the market failed to appreciate.3 An

internal Vista presentation contemplated paying $27 per share for the public

minority and for part of General Atlantic’s stake. The presentation envisioned a post-

transaction structure in which Vista owned 44% of the Company, co-investors owned

17.6%, and General Atlantic owned 38.4%.

During a May 31, 2022 Zoom call, Bennett told Vista that General Atlantic was

open to a bid. Vista ramped up its efforts and hired Bain & Company for help. Bennett

continued talking to Vista about a potential transaction without involving the Board.

On June 10, 2022, Scott Semel, the Company’s General Counsel, contacted

Graham Robinson, an M&A partner at Skadden, Arps, Slate, Meagher & Flom LLP,

to schedule a call with directors Dunnam, Hamilton, and Rodriguez. Semel explained

2 Compl. ¶ 372 (quoting GA_00009400 at 400).

3 Id. ¶ 77 (quoting VISTA_00004790 at 791).

6
that the directors were prospective members of a special committee and asked

Robinson to describe his experience and credentials for them. It is reasonable to infer

at this stage that Semel was seeking to influence the future special committee’s choice

of counsel.

C. A Short-Lived Engagement

On June 27, 2022, the Board discussed a potential transaction involving Vista

for the first time. Robinson attended as counsel to the yet-to-be-formed special

committee. The Board resolved to form a special committee comprised of Dunnam,

Hamilton, and Rodriguez (the “Committee”). The Board determined that Dunnam,

Hamilton, and Rodriguez were “independent from General Atlantic and not otherwise

interested.”4 The minutes do not explain the basis for those determinations.

The next day, Vista and the Company entered into a non-disclosure agreement,

and the Company granted Vista access to due diligence materials. Bennett and

Cassandra Hudson, the Company’s CFO, met with Vista that evening.

The following morning, Vista met with a broader swathe of Company

management. Vista described its “Partnership Philosophy” that included

“[a]ccelerating growth and driving value through close partnership with our

executives.”5

4 Id. ¶ 95 (quoting EngageSmart_0000046614 at 615).

5 Id. ¶ 105 (quoting VISTA_00004286; VISTA_00004287 at 294).

7
Meanwhile, the Committee looked for a financial advisor. They ruled out

Goldman as “conflicted.”6 Hamilton told a Summit colleague that when selecting an

advisor, he was “trying to curry favor with some places that tend to show [Summit]

more deal flow.”7

On July 21, 2022, the Vista deal team presented internally to Vista’s

investment committee. The team proposed to buy a 55.6% stake in the Company for

$26 per share. General Atlantic would receive cash for 37% of its stake and roll over

the other 63%, ending up with 44.4% of the post-transaction entity. The investment

committee liked the deal but deferred proceeding because of macroeconomic

conditions.

On July 27, 2022, Vista told Bennett they were standing down. Vista

suggested, however, that they “plan[ned] to come back to [the Company] in the

coming months with a specific proposal on valuation.”8

With no transaction imminent, the Committee suspended its work.

6 Id. ¶ 109 (quoting SC-00000823 at 824).

7 Id. ¶ 110 (quoting SC-00000823 at 824).

8 Id. ¶ 121 (quoting GA_00009162 at 162).

8
D. General Atlantic And Goldman Consider Strategic Alternatives.

After Visa withdrew, General Atlantic told Goldman that it felt “paralyzed” in

its efforts to monetize its stake in the Company.9 General Atlantic and Goldman

brainstormed alternatives to generate liquidity.

One alternative was a secondary offering. On March 1, 2023, the Company

announced a secondary offering of eight million shares owned by General Atlantic,

Summit, and some members of management. The offering was priced at $19 per

share—below the prior day’s closing price of $21.04.

The secondary offering was not enough to address General Atlantic’s liquidity

needs. General Atlantic continued to explore alternatives, including a potential

leveraged buy-out to cash out some of its stake.

E. Vista Returns.

In May 2023, Vista re-engaged. The deal team consulted Kirkland & Ellis for

legal advice and Ernst & Young for tax advice. Vista anticipated “taking another run

at this name this summer.”10 The transaction model envisioned Vista paying $23 per

share to the public and for some of General Atlantic’s stake, but with General Atlantic

rolling over enough shares to own 50% of the post-transaction entity. Vista also

modeled a transaction at $25 per share.

9 Id. ¶ 124 (quoting GS_00028479 at 479).

10 Id. ¶ 170 (quoting VISTA_00008680 at 680–81).

9
During the week of June 12, 2023, Stamas golfed and dined with Vista

executive Michael Fosnaugh in Nantucket. They agreed to “stay[] in touch” and

“compar[e] notes on what we’re seeing / things in our portfolio.”11 Fosnaugh forwarded

the email exchange to his Vista colleagues as an “Fyi if this connection can ever be

useful for EngageSmart.”12

F. General Atlantic And Goldman Continue Strategizing.

On June 20, 2023, the banker that had let the secondary offering advised

General Atlantic that investors remained focused on its “monetization plans.”13 That

same day, General Atlantic asked Goldman “to run take private math for

EngageSmart” and scheduled a kickoff call for June 27.14

During the call, the group discussed two structures. In one, a buyer would

acquire control with “GA expect[ing] a big premium.”15 In the other, General Atlantic

would roll over its full stake and return control and would not receive a control

premium, but the Company would sell off businesses to generate liquidity.16 General

Atlantic preferred the latter option.

11 Id. ¶ 131 (quoting VISTA_00009604 at 605).

12 Id. ¶ 132 (quoting VISTA_00009604 at 604).

13 Id. ¶ 133 (quoting GA_00003158 at 158–59).

14 Id. ¶ 136 (quoting GS_00049060 at 062).

15 Id. ¶ 137 (quoting GS_00065857).

16 Id. (quoting GS_00065857).

10
The group also discussed the likelihood of litigation for “a related party

[transaction].”17 They noted that “[a]ll the books and documents that get made

become public” and resolved to be conscious of “[w]hat should be talked about / written

down, given the complexity of potential transaction.”18

On July 12, 2023, the group had a follow-up call. Goldman presented a “Take

Private Through Minority Sale.”19 A draft of the presentation cited as benefits the

“[p]otential for GA to monetize some stake” while “[a]llow[ing] GA to maximize future

upside and drive strategic vision.”20 General Atlantic’s counsel at Paul Weiss rewrote

those bullet points to reference “[n]ear term liquidity for minority shareholders.”21

Goldman questioned whether a minority sale was actionable. One banker wrote,

“[N]obody wants to write [a] big check and be in a minority position.”22

The Goldman materials also discussed a potential “Take Private Through

Majority Sale.”23 A draft of the presentation cited as benefits “[a]llow[ing] GA a near-

17 Id. ¶ 138 (quoting GS_00065857).

18 Id. (quoting GS_00065857).

19 Id. ¶ 148 (quoting GS_00066149 at 150).

20 Id. (quoting GS_00066149 at 150).

21 Id. ¶ 150 (quoting GS_00066301).

22 Id. ¶ 147 (quoting GS_00066316 at 316).

23 Id. ¶ 151 (quoting GS_00066301).

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term liquidity event with ability to participate in future upside.”24 Paul Weiss struck

that bullet point from the presentation.

The Goldman materials also included an “Illustrative LBO Analysis.”25

Goldman modeled a takeout price of $23 per share.

That same day, a Goldman partner described the potential deal timeline: “We

propose a deal and a price, we haggle with the committee, likely bump our price then

we shake hands and then do the confirmatory diligence.”26 The Goldman partner

noted that “[t]he ideal” would be to “present a fully baked deal with price agreed

between us and partner to board.”27

G. Goldman Realigns.

On July 14, 2023, General Atlantic and Goldman held a “Sync” call.28 After the

call, Stamas spoke with Paul Weiss, inferably about whether Goldman could switch

from helping General Atlantic to working as the Company’s financial advisor.

According to Stamas, the Paul Weiss attorney’s “instinct was that it was workable,

but he also wanted to reflect and discuss with a colleague.”29

24 Id. (quoting GS_00066301).

25 Id. ¶ 161 (quoting GS_00066585 at 591).

26 Id. ¶ 155 (quoting GS_00066762 at 762).

27 Id. ¶ 158 (quoting GS_00066762 at 762).

28 Id. ¶ 162 (quoting GS_00030381).

29 Id. ¶ 163 (quoting GA_00010274 at 276).

12
On July 17, 2023, the Paul Weiss attorney reported that he was “having one

more convo.”30 General Atlantic, Goldman, and Paul Weiss followed up with a call.

Later that day, the Goldman bankers sought internal approval “to advise

EngageSmart on a minority sale / take-private transaction” but noted that they

“ha[dn’t] spoken to the company on this yet.”31 Goldman’s in-house counsel was

concerned. The in-house lawyer wanted to ensure that “the special committee with

advice from Skadden really agree and be comfortable with the company hiring us to

do this.”32 In-house counsel also wanted to ensure that the committee would be “in

the loop and get to sign off on or veto the things we do.”33

H. The Committee Reactivates.

On July 20, 2023, the Board revived the Committee with the same

membership. Skadden reengaged as Committee counsel, with Robinson again leading

the engagement.

On July 21, 2023, Robinson told the Committee that General Atlantic was

considering selling a portion of its stake, but that the block would only constitute a

minority position in the Company. He reported that General Atlantic was “not willing

30 Id. ¶ 164 (quoting GA_00010274 at 276).

31 Id. ¶ 165 (quoting GS_00030624).

32 Id. ¶ 168 (quoting GS_00067070 at 070).

33 Id. (quoting GS_00067070 at 070).

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to solicit whole company acquisition proposals,” but acknowledged that General

Atlantic “might be receptive” if any proposal materialized.34

Robinson also informed the Committee that the Company intended to hire

Goldman as its financial advisor. Robinson reported that Goldman was “not expected

to be an advisor to the Special Committee given its long-standing relationship with

the Company and its controlling shareholder, [General Atlantic].”35 Robinson

informed the Committee that Goldman would be reaching out to private equity firms

about purchasing a minority stake.

On July 23, 2023, Dunnam withdrew from the Committee because of a

connection to General Atlantic. That left Hamilton and Rodriguez as the Committee’s

members.

The Committee signed off on the Company retaining Goldman. The Board and

Committee meeting minutes do not reflect any discussion of Goldman’s history

representing General Atlantic or other potential conflicts.

The Committee retained Evercore as its financial advisor. Evercore disclosed

receiving $41 million in fees from General Atlantic over the past five years. Evercore

did not disclose its relationships with Summit or Vista. After the Committee hired

Evercore, the firm disclosed that it had received $36 million from Summit over the

past five years and $18.5 million from Vista from January 2020 to October 2023. An

34 Id. ¶ 177 (quoting SC-00000107 at 108).

35 Id. ¶ 178 (quoting SC-00000107 at 109).

14
Evercore Senior Managing Director disclosed that he was personally “involved in a

live engagement currently with Summit with fee tbd.”36

The engagement letters for both Goldman and Evercore made their

compensation contingent on completing a transaction. Evercore had initially

requested that its engagement letter provide for a fee payment if the Company

remained a standalone entity and decided to spin-off a subsidiary, but the Committee

declined. According to the Complaint, after the Committee’s refusal, Evercore backed

off its initial assessment that a subsidiary spin-off could be more favorable for the

Company’s public stockholders than General Atlantic’s proposed structure.

The Committee authorized the Company to work with General Atlantic and

Goldman to conduct outreach to potential buyers. Around this time, although the

exact timing is unclear, Stamas asked the Committee to authorize General Atlantic

to provide confidential information to potential investors about how “GA remaining

a controlling shareholder could enable future tax efficient spinoff structures for a

separation of the Company’s business.”37 Stamas argued that providing the

information “could cause new sponsors to increase the valuation of their

investment.”38 The Committee agreed.

36 Id. ¶ 190 (quoting EVR_0000929 at 930).

37 Id. ¶ 179 (quoting EngageSmart_0000046627 at 628).

38 Id. (quoting SC-00000107 at 108).

15
The Committee decided not to explore interest in a whole company sale or other

transactions that General Atlantic had not agreed to support, like a sale of a majority

stake in the Company. Goldman’s outreach script stated the Company and General

Atlantic were only soliciting interest in a minority stake.

On July 31, 2023, General Atlantic delivered a letter to the Board that

conditioned any transaction on independent special committee approval and a

majority-of-the-minority vote.

I. Plans For Bidder Outreach

On August 6, 2023, Evercore, Skadden, and Goldman held a kickoff call to

discuss the plan and timeline for bidder outreach. Evercore criticized the plan to only

solicit interest in a minority sale. Evercore believed the process should incorporate

the possibility of a whole company sale and that after receiving expressions of

interest, everyone should “step back and analyze strategic alternatives before moving

too far down any path.”39

Evercore made similar points in a presentation to the Committee. Evercore

prioritized “[e]nsuring Special Committee and Advisors can properly evaluate

standalone value versus strategic alternatives before any process progresses past a

preliminary phase.”40 Evercore prioritized “[m]aintaining optionality,” including for

39 Id. ¶ 211 (quoting EVR_0020683 at 693).

40 Id. ¶ 214 (quoting EVR_0059008 at 010).

16
a “potential WholeCo or other value-maximizing transaction.”41 Evercore advised

that in light of those considerations, the “GS outreach plan and forward calendar”

had to be “[r]efin[ed].”42 Evercore proposed that the outreach script say the Board was

“open to all value-creating alternatives,” including a sale of the whole Company.43

Before approving any edits, the Committee sought “feedback from GA.”44

General Atlantic vetoed Evercore’s proposed language and replaced it with a

statement that “[t]he deal we are considering right now is as discussed above [i.e., a

minority deal only].”45 Evercore reiterated that “[w]e should not decisively rule out a

Change of Control transaction at this point.”46 On behalf of the Committee, Hamilton

rejected Evercore’s advice and signed off on General Atlantic’s version.

Evercore also advised the Committee to consider strategic buyers, who had a

“potentially higher ability to pay given synergy potential.”47 The Committee,

however, resolved not to reach out to strategic partners because “GA was expected to

41 Id. (quoting EVR_0059008 at 010).

42 Id. (quoting EVR_0059008 at 010).

43 Id. ¶ 212 (quoting GS_00068846 at 847).

44 Id. ¶ 222 (quoting SC-00000128 at 129).

45 Id. ¶ 224 (quoting GS_00069317 at 317).

46 Id. ¶ 225 (quoting EVR_0020944).

47 Id. ¶ 220 (quoting EVR_0059201 at 242).

17
request prioritized outreach to the investors it viewed as more likely to be interested

in a [minority stake].”48

Evercore therefore provided the Committee with a list of prospective financial

buyers broken down into three tiers: 1, 1A, and 2. Vista fell into tier 1A. Evercore did

not include Visa in tier 1 because Vista was expected to want to acquire control, and

General Atlantic ostensibly would not consider that.

The bankers only called the tier 1 buyers. They did not contact Vista.

J. Bennett Tips Vista.

Unlike General Atlantic and the bankers, Bennett wanted a change-in-control

transaction. He hoped to retire, and a change-in-control transaction would cause all

of his unvested options to vest and become exercisable. He also stood to gain roughly

$11 million in severance if he was terminated or resigned for good reason after a

change of control.

Bennett knew that Vista was interested in a control deal. On August 8, 2023,

without the Committee’s knowledge or permission, Bennett emailed Vista’s Wilson.

They agreed to meet on September 5.

After Bennett’s outreach, Vista spoke with General Atlantic on August 21,

2023. Vista said it had continued to follow the Company and remained interested in

a transaction.

48 Id. ¶ 221 (quoting SC-00000128 at 129).

18
On September 5, 2023, Bennett and Wilson met in San Francisco. Wilson

relayed Vista’s positive views about the Company. Bennett told Wilson that he

wanted to retire after a transaction.

Bennett told Goldman about the meeting. No one told the Committee.

K. The Sale Process

General Atlantic wanted to complete a transaction before the Company’s next

earnings announcement in November 2023. Goldman followed General Atlantic’s

instructions and scheduled meetings with potential buyers for August. A sale process

that proceeded at that pace would limit the Committee’s time to evaluate other

alternatives—just what Evercore had warned the Committee about.

1. Goldman Tries To Exclude Evercore.

Goldman’s cutthroat instincts soon impaired the Committee’s ability to oversee

the sale process. The NDA for potential acquirers required all bidder communications

to go through both Goldman and Evercore. Goldman, however, sought to exclude

Evercore at every turn. Goldman repeatedly failed to share bidder correspondence

with Evercore. One lead Evercore banker wondered “how come GS in receipt of bidder

questions without sharing with us,” when “[t]he nda clearly states no interaction but

through advisors.”49 Evercore asked to attend meetings with bidders, but Goldman

refused.

49 Id. ¶ 242 (quoting EVR_0021620 at 621).

19
Goldman does not appear to have had any valid process-related reason for

excluding Evercore. The internal Goldman emails ooze self-importance, dismissing

Evercore as “delusional” to regard the firms as “basically co-advisors.”50 When

Evercore provided comments, Goldman bankers derided them “useless” and saw “no

need” for them.51

In fact, Evercore played a critical role by acting as the Committee’s eyes and

ears. Goldman let pettiness undermine the process.

2. Vista Receives Special Treatment.

On September 19, 2023, Goldman told Evercore that Vista had contacted

General Atlantic. Goldman reported that General Atlantic was “thinking of letting

them in the process.”52 Goldman rejected two other potential acquirers out of hand,

saying only “they will not be appropriate partners at this juncture.”53 The Committee

learned of the decisions after the fact.

Vista immediately received special treatment. Vista asked to work with Bain,

and the Committee agreed as long as Vista signed a new confidentiality agreement.

Other bidders were not allowed to work with consultants. Vista also asked to use its

50 Id. ¶ 243 (quoting GS_00092810 at 816–17).

51 Id. (quoting GS_00092810 at 816–18).

52 Id. ¶ 249 (quoting EVR_0008224 at 224–25).

53 Id. (quoting EVR_0008224 at 225).

20
files from its engagement with the Company in 2022. The Committee agreed, giving

Vista access to information that other bidders did not have.

3. Evercore Tries Again To Open Up The Process.

With Vista in the process and expected to make a control bid, Evercore again

recommended that the Committee consider transaction structures other than a

minority sale. Evercore noted that “[a] control sale of the Company offers the

potential to realize a premium to the current share price.”54 Evercore also advised a

control sale would appeal to financial sponsors and that excluding that option was

limiting “the depth of buyer demand.”55

When the time came to draft instruction for first-round bids, Evercore proposed

modifying the process letter to include an option for bidders to propose a different

transaction structure. Goldman, General Atlantic, and Paul Weiss struck the edit.

Evercore explained to the Committee that including its alternative would generate

information about what bidders would pay for control. The Committee approved the

version that omitted Evercore’s proposal.

On September 26, 2023, Goldman sent the letter to potential bidders. It

established a deadline of October 5 for preliminary indications of interest. The letter

only solicited interest in up to 49% of the Company’s shares.

54 Id. ¶ 255 (quoting EVR_0048450 at 452).

55 Id. ¶ 256 (quoting EVR_0048450 at 452).

21
The bid process letter openly contemplated special consideration for General

Atlantic by asking bidders to “indicate the amount of funds you assume is used for a

distribution of proceeds to the non-selling shareholder.”56 The letter reminded bidders

that their confidentiality agreements prohibited them from speaking with financing

sources without Goldman’s express permission.

L. Goldman Tips Vista.

On October 5, 2023, Reuters reported that General Atlantic was exploring a

sale of the Company. Eight potential buyers reached out to Goldman and Evercore.

Evercore’s lead banker thought the inbound calls should open the process to more

interested parties and deal structures. Later that day, four of the initial bidders

(Advent, Francisco Partners, Hg Capital, and TCV) submitted first-round proposals.

All proposed to acquire minority stakes for up to $22.00 per share. Vista missed the

deadline.

The next morning, Evercore tried to coordinate with Goldman on follow-up

calls. Goldman brushed off the idea, saying they should “wait until we get Vista before

talking to these parties.”57

56 Id. ¶ 368 (quoting SA-ESMT0009274 at 275).

57 Id. ¶ 280 (quoting EVR_0011147).

22
On October 7, 2023, Goldman suggested to Vista that “any bid in this round”

should be “above $22.00.”58 That tip set a floor for Vista’s first-round bid. Internally,

the Vista team members discussed their preference for a control bid.59

On October 9, 2023, Vista proposed to buy 49% of the equity in a range of

$22.00 to $23.00 per share. Vista separately emphasized to Goldman that it

“[w]ant[ed] to get [a] deal done quickly” and would be conducting “business diligence

over next week.”60 Days earlier, Evercore’s bankers had speculated internally about

whether Vista would pursue “the playbook they often do,” which involves sprinting

ahead of other bidders thanks to an early informational advantage, then pressuring

the target with an exploding offer.61

The Committee met the next day. The members decided to invite Vista, Hg

Capital, and Francisco Partners to make second-round bids and allow Thoma Bravo

(who did not submit an initial offer) to continue due diligence and seek potential

equity financing. The Committee declined to invite bids from any of the parties who

expressed interest after the Reuters article.

58 Id. ¶ 281 (quoting Ex. D at 43; citing GS_00052160).

59 Id. ¶ 283 (Vista representatives discussing that they “likely won’t be able to

get comfortable with the lack of operational control” from holding a minority position
(quoting VISTA_00021227 at 227)).

60 Id. ¶ 287 (quoting GS_00052160 at 160).

61 Id. ¶ 268 (quoting EVR_0009923 at 923).

23
The Committee told Hg Capital, Francisco Partners, and Thoma Bravo that

the final bid date was roughly four weeks away. The Committee told Vista that “if it

wished to complete its due diligence more quickly” then “the Company would be

willing to support Vista’s efforts.”62 Internally, Vista was already modeling a

transaction in which it would acquire 70% of the post-transaction entity.

M. Vista’s “Curveball” Control Bid

On October 13, 2023, Vista asked Goldman to arrange a meeting with Bennett

and Hudson (the Company’s CFO) on October 18. The Committee approved the

meeting on two conditions. First, someone from Evercore had to attend. Second, Vista

could not discuss the transaction terms or post-closing compensation or roles.

During the dinner, Hudson asked Vista for its “thoughts on leverage,” violating

the Committee’s instruction not to discuss deal terms.63 Although Evercore attended,

Goldman continued to sideline the firm. Goldman failed to respond to Evercore’s

emails and denied Evercore access to specific folders in the virtual data room. That

was more pettiness that undermined the process.

On Friday, October 20, 2023, Vista’s investment committee authorized the deal

team to bid up to $24 per share for a 70% interest in the Company. Vista’s model

contemplated a price range of $22 to $26 per share.

62 Id. ¶ 297 (quoting SC-00000121 at 122).

63 Id. ¶ 313 (quoting EVR_0014276 at 277).

24
During a call that afternoon with General Atlantic, Goldman, and Evercore,

Vista communicated that it was “not interested in a deal in which GA retains control”

and would “not participate in the process if that is the only structure GA wishes to

pursue.”64 Vista then proposed to acquire 60% of the Company at $22.75 per share.

General Atlantic would roll over a portion of its existing shares and receive 40% of

the post-closing equity. Vista’s offer letter expressed a need for “Speed & Certainty”

and a desire to engage “on a very expedited timeline.”65 Otherwise, Vista would “be

forced to reevaluate.”66

Fast meant really fast. Vista proposed announcing the transaction “by market

open on Monday.”67 The General Atlantic and Company representatives told Vista

that “it was a lot to digest and certainly a curveball.”68

Stamas immediately sent the “curveball” offer to Goldman and Paul Weiss.

Goldman told Evercore that General Atlantic was potentially willing to consider a

control deal with Vista.

Evercore reported to the Committee at a 3:50 p.m. meeting. The Committee

expressed concern that Vista would “disengage” if the Company spent time

64 Id. ¶ 320 (quoting EngageSmart_0000037875 at 876–77).

65 Id. ¶ 322 (emphasis omitted) (quoting GS_00089248 at 249).

66 Id. (emphasis omitted) (quoting GS_00089248 at 249).

67 Id. ¶ 320 (quoting EngageSmart_0000037875 at 876–77).

68 Id. ¶ 324 (quoting VISTA_00037119).

25
negotiating with other potential bidders over a control transaction, even though

Francisco Partners previously expressed a preference for a control deal.69 The

Committee also discussed whether Vista might buy all of the Company’s equity

without any General Atlantic rollover, but the Committee never proposed asking

Vista if it would pay more to acquire 100% of the Company. The Committee also did

not consider including new bidders or different transaction structures.

Instead, the Committee focused on Vista. The Committee prioritized “seeking

to maximize the per share price that Vista would pay . . . while limiting the risk that

General Atlantic would request changes to governance or other terms proposed by

Vista that would impact the per share price.”70

The Committee met again at 6 p.m. Evercore reported that General Atlantic

was evaluating the governance structure of the post-closing company. Evercore

warned that General Atlantic’s governance demands could affect the price.

The Committee directed Evercore to counter at $24 per share with a 45-day go-

shop, no expense reimbursement if stockholders did not approve the deal, and full

acceleration and payment in cash for equity awards. Before countering, the

Committee asked General Atlantic for input. General Atlantic told the Committee it

would support the counteroffer if General Atlantic could concurrently negotiate

governance terms with Vista.

69 Id. ¶ 328 (quoting SC-00000131 at 132; Ex. D at 47–48).

70 Id. ¶ 331 (quoting SC-00000131 at 132–33).

26
The governance terms included the number of directors General Atlantic could

appoint, veto rights over specified transactions, transfer restrictions and sale rights,

and a right to restructure the Company’s mix of debt and equity. The Committee

agreed that those terms could affect the price Vista would pay but decided to let

General Atlantic negotiate concurrently anyway.

Evercore emailed the Committee’s counterproposal to Vista that evening.

General Atlantic’s negotiations with Vista were already in full swing.

On Saturday, October 21, 2023, Vista increased its offer to $23 per share in

cash and agreed on expense reimbursement. Vista rejected the go-shop mechanism

and the acceleration and cash out of equity awards.

General Atlantic wanted to counter at $23.50 per share and propose one year

of vesting credit for all equity awards. The Committee adopted that proposal and

added a 30-day go-shop provision. The Committee again permitted General Atlantic

to negotiate governance terms on its own. In those negotiations with Vista, General

Atlantic introduced the concept of the Company taking on debt to support an

additional payout to General Atlantic.

On Sunday, October 22, 2023, Vista held firm on its $23.00 per-share price.

Vista also rejected vesting credit. Vista agreed to a 30-day go-shop.

The Committee asked for General Atlantic’s “blessing” and waited for General

Atlantic “to say ok to price.”71 Stamas thought Vista might pay another quarter or

71 Id. ¶ 345 (quoting GA_00013002 at 007–08).

27
fifty cents, but felt it was “[d]umb” to put the deal at risk for that small an increase.72

That decision also benefited General Atlantic because its models showed that a fifty

cent increase would lead to Vista demanding more equity in the rollover. That would

cause General Atlantic to receive less cash in the deal. Goldman recommended

against asking Vista for another price increase.

General Atlantic decided to accept Vista’s price if Bennett signed off. He did.

General Atlantic also wanted to sell more shares in the offer and end up with a 35%

stake rather than 40%.

With General Atlantic on board, the Committee told its advisors to finalize the

terms. Just before 5 p.m., General Atlantic’s counsel sent a draft governance term

sheet to Vista’s counsel. The term sheet lowered the equity rollover to 35%. Vista

accepted it.

N. The Recapitalization

On October 23, 2023, the Board unanimously approved the transaction (the

“Recapitalization”). The headline value of the deal was $4 billion. The Company’s

public stockholders would receive $23 per share. General Atlantic would receive $23

per share for a portion of its shares and roll over the balance for a 35% stake in the

post-transaction entity. Vista would end up with a 65% stake.

Vista only provided part of the funding from its own balance sheet. The

Company provided the rest by taking on debt. How much equity General Atlantic

72 Id. ¶ 351 (quoting GA_00013002 at 010).

28
rolled over would depend on how much debt the Company could borrow. As the

Company borrowed more debt, the equity value of its post-transaction shares

decreased. That meant General Atlantic could use fewer pre-transaction shares to

warrant its 35% stock, sell more shares into Vista’s offer, and receive a greater

amount of cash. The smaller the equity rollover, the more liquidity General Atlantic

would receive.

When the parties agreed on terms, the exact amount of debt had not been

finalized. The Complaint uses the parties’ estimates, made at the time of the signing,

as to what the post-transaction debt would be.73 The parties estimated that General

Atlantic could sell 74% of its pre-closing equity into the offer and roll over the

remaining 26% in exchange for 35% of the post-closing equity. That level of debt

would also support a dividend of $500 million for General Atlantic.

The Recapitalization thus provided the public stockholders and General

Atlantic with different consideration. The public stockholders received $23 per share.

General Atlantic received three forms of consideration. The first was the same $23

per share that the public stockholders received. The second was the 35% equity stake

in the post-transaction entity. The third was the $500 million dividend.

The amount of debt that the Company took on affected all three components.

It also required negotiating with Vista, because Vista would own a 65% stake in an

entity burdened with the debt. Internally, General Atlantic recognized the

73 Id. ¶ 367 & n.700.

29
implications of the debt negotiation. An investment committee presentation dated

October 22, 2023, reflected that General Atlantic expected “to receive liquidity at

close totaling ~$1,022M, via both the incremental debt raised at the company and our

sell down of equity shares.”74 That same presentation calculated that approximately

$500 million of the liquidity would come from “proceeds from the debt financing.”75

General Atlantic’s internal deal announcement likewise highlighted that the

Recapitalization would generate “~$850M - $1Bn of liquidity as a result of both our

partial equity sell down and receipt of proceeds from the debt financing.”76

After the announcement of the Recapitalization, the Company conducted the

go-shop. A higher offer did not emerge. When Francisco Partners heard about the

deal, they were “[d]isappointed that the deal turned into majority” and “[w]ished they

were told.”77 They saw the deal as a product of “the vista playbook.”78 Hg Capital

asked Goldman “how this ended up majority” and expressed disappointment that the

Company “tapped out.”79 Overbidding during a go-shop is not the same as

74 Id. ¶ 387 (quoting GA_00012822 at 825).

75 Id. ¶ 388 (quoting GA_00003546).

76 Id. (quoting GA_00003546).

77 Id. ¶ 356 (quoting EVR_0027932 at 934).

78 Id. (quoting EVR_0027932 at 934).

79 Id. (quoting EVR_0028178 at 178).

30
participating during a pre-signing sale process. Real competitive pressure during the

pre-signing phase could have generated a superior outcome.

O. The Recapitalization Closes.

On December 19, 2023, the Company issued the definitive proxy soliciting

stockholder support for the Recapitalization (the “Proxy Statement”). Vista and

General Atlantic also made disclosures to stockholders through filings on Schedule

13E-3.

The stockholders approved the Recapitalization on January 23, 2024. The

Recapitalization closed soon after.

Goldman received $36 million and Evercore received $24 million in contingent

fee compensation. After the parties had agreed on terms, Hamilton told a Summit

colleague who was “chasing” an Evercore-advised target that he delivered “$25M to

EVR for a short sprint.”80 Hamilton added, “I hope you use that to win your deal.”81

P. This Litigation

Anthony Franchi filed this class action lawsuit on October 27, 2023. Genesee

County Employees’ Retirement System and Morabito Living Revocable Trust DTD

5/29/2015 took over as co-lead plaintiffs.

The operative complaint spans 217 pages and contains 488 paragraphs. It

contains seven counts.

80 Id. ¶ 192 (quoting SC-00006113 at 113–14).

81 Id. (quoting SC-00006113 at 113–14).

31
In Count I, the plaintiffs assert a breach of contract claim against the Company

and eight individual directors: Bennett, Stamas, Osnoss, Mangum, McKenzie,

Hamilton, Dunnam, and Rodriguez (the “Director Defendants”). Count I maintains

that the Company and the Director Defendants breached Section 4(b) of the

Company’s certificate of incorporation, which requires all shares of common stock to

have “the same powers, rights and privileges and shall rank equally, share ratably

and be identical” (the “Equal Terms Provision”).82 Count I claims the Recapitalization

violated the Equal Terms Provision because General Atlantic received a non-ratable

benefit in the form of the equity rollover.

In Count II, the plaintiffs assert a claim for tortious interference with contract

against General Atlantic83 and Vista.84 Count II claims the defendants tortiously

interfered with the plaintiffs’ rights under the Equal Terms Provision.

In Count III, the plaintiffs assert a claim for breach of fiduciary duty against

General Atlantic. In Count IV, the plaintiffs assert a claim for breach of fiduciary

duty against the Director Defendants. In Count VI, the plaintiffs assert a claim for

breach of fiduciary duty against Bennett in his capacity as an officer. Each count

contends that the fiduciaries breached their duties by engaging in the

82 Ex. A, art. IV, § 4(b).

83 The named defendants are General Atlantic, L.P. and the two General
Atlantic entities that are rollover stockholders in the post-transaction entity.

84 The named defendants are Vista Equity Partners Management, LLC and

various affiliated funds and entities.

32
Recapitalization and by causing the Company to issue false and misleading

disclosures to stockholders.

Counts V and VII assert claims for aiding and abetting breaches of fiduciary

duty. Count V asserts that claim against Vista. Count VII asserts that claim against

Goldman.

On November 12, 2025, the court dismissed Count I, any remaining aspects of

Count II not previously dismissed by stipulation, and Count IV to the extent the

claimed breach of fiduciary duty related to a failure to comply with the Equal Terms

Provision.85 This decision addresses the remaining claims.

II. LEGAL ANALYSIS

A motion to dismiss under Rule 12(b)(6) tests whether the complaint’s

allegations state a claim on which relief can be granted. When considering a Rule

12(b)(6) motion, “a trial court should accept all well-pleaded factual allegations in the

Complaint as true, accept even vague allegations in the Complaint as ‘well-pleaded’

if they provide the defendant notice of the claim, [and] draw all reasonable inferences

in favor of the plaintiff.”86 The court should “deny the motion unless the plaintiff could

not recover under any reasonably conceivable set of circumstances susceptible of

85 Dkt. 185.

86 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531,

536 (Del. 2011).

33
proof.”87 Delaware’s “governing ‘conceivability’ standard is more akin to ‘possibility,’

while the federal ‘plausibility’ standard falls somewhere beyond mere ‘possibility’ but

short of ‘probability.’”88

Three issues predominate across the remaining counts. The first is the

standard of review. The defendants argue that they properly implemented the MFW

framework such that an irrebuttable version of the business judgment rule applies

and requires dismissal. This decision holds that entire fairness applies, so the claims

survive.

Second, this decision analyzes whether Rodriguez, Dunnam, Hamilton, and

Bennett are entitled to exculpation. The plaintiffs fail to plead any non-exculpated

claims against Rodriguez, so he is dismissed on this basis. Dunnam, Hamilton, and

Bennett cannot rely on exculpation at the pleading stage.

Third, this decision analyzes the aiding and abetting claims. The claim against

Goldman survives. The claim against Vista does not.

A. The Standard Of Review

Analysis starts with the standard of review. The defendants argue that they

properly implemented the MFW framework.89 If so, then a version of the business

87 Id.

88 Id. at 537 n.13.

89 Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014).

34
judgment rule applies under which the only remaining claim is waste.90 That

exception is more theoretical than real, because to state a claim for waste, the terms

of the transaction must be so extreme “that no rational person acting in good faith

could have thought the [transaction] was fair to the minority.”91 “At that point in the

analysis, two groups of rational people—the committee and the minority

stockholders—would have approved the transaction.”92 It is “logically difficult to

conceptualize how a plaintiff can ultimately prove a waste or gift claim in the face of

a decision by fully informed, uncoerced, independent stockholders to ratify the

transaction.”93 The resulting version of the business judgment rule is thus rightfully

described as “irrebuttable.”94

Here, the plaintiffs did not attempt to state a claim of waste, so if MFW applies,

then the motions to dismiss must be granted. If, by contrast, MFW fails, then the

standard of review becomes entire fairness. The defendants do not contend that the

Complaint fails to state a claim under that standard, so the motions to dismiss would

90 See In re Books-A-Million, Inc. S’holders Litig., 2016 WL 5874974, at *1 (Del.

Ch. Oct. 10, 2016), aff’d, 164 A.3d 56 (Del. 2017) (TABLE).

91 In re MFW S’holders Litig., 67 A.3d 496, 500 (Del. Ch. 2013), aff’d sub nom.

Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014).

92 In re Dell Techs. Inc. Class V S’holders Litig., 2020 WL 3096748, at *14 (Del.

Ch. June 11, 2020).

93 Harbor Fin. P’rs v. Huizenga, 751 A.2d 879, 901 (Del. Ch. 1999).

94 Cf. In re Volcano Corp. S’holder Litig., 143 A.3d 727, 738 (Del. Ch. 2016),

aff’d, 156 A.3d 697 (Del. 2017) (TABLE).

35
be denied. At that point, the analysis would proceed to whether Rodriguez, Dunnam,

Hamilton, and Bennett are entitled to dismissal on the basis of exculpation.95

1. The MFW Framework

To satisfy MFW, “the controller [must] irrevocably and publicly disable[ ] itself

from using its control to dictate the outcome of the negotiations and the shareholder

vote.”96 The Delaware Supreme Court has articulated six necessary and sufficient

conditions for achieving that outcome:

(i) the controller conditions the procession of the transaction on the
approval of both a Special Committee and a majority of the minority
stockholders;

(ii) the Special Committee is independent;

(iii) the Special Committee is empowered to freely select its own advisors
and to say no definitively;

(iv) the Special Committee meets its duty of care in negotiating a fair
price;

(v) the vote of the minority is informed; and

(vi) there is no coercion of the minority.97

95 See In re Cornerstone Therapeutics Inc., S’holder Litig., 115 A.3d 1173, 1179–

80 (Del. 2015).

96 MFW, 88 A.3d at 644.

97 Id. at 645 (formatting altered).

36
Whether a transaction complies with MFW can be adjudicated at the pleading stage.98

The plaintiff can avoid dismissal by pleading “a reasonably conceivable set of facts

showing that any or all of those enumerated conditions did not exist.”99

The plaintiffs argue that the defendants failed to comply with five MFW

conditions. They do not assert that the minority stockholders were coerced.

This decision only considers whether the minority stockholder vote was fully

informed. The plaintiffs have stated reasonably conceivable claims for breach of the

duty of disclosure. MFW does not apply, and this decision need not reach the other

requirements.

2. Whether The Stockholder Vote Was Fully Informed

MFW requires a fully informed majority-of-the-minority vote.100 To satisfy that

condition, the Company’s disclosures must have “apprised stockholders of all material

information” and “not materially mislead them.”101 To defeat that requirement at the

pleading stage, the Complaint must support “a rational inference that material facts

98 See In re Synutra Int’l, Inc. S’holder Litig., 2018 WL 705702, at *2 (Del. Ch.

Feb. 2, 2018), aff’d sub nom. Flood v. Synutra Int’l, Inc., 195 A.3d 754 (Del. 2018).

99 MFW, 88 A.3d at 645; accord Olenik v. Lodzinski, 208 A.3d 704, 715 (Del.

2019).

100 MFW, 88 A.3d at 645.

101 Morrison v. Berry, 191 A.3d 268, 282 (Del. 2018).

37
were not disclosed or that the disclosed information was otherwise materially

misleading.”102

Under Delaware law, a fact is material “if there is a substantial likelihood that

a reasonable shareholder would consider it important in deciding how to vote.”103 The

test does not require “a substantial likelihood that [the] disclosure . . . would have

caused the reasonable investor to change his vote.”104 Instead, the question is whether

there is “a substantial likelihood that the disclosure of the omitted fact would have

been viewed by the reasonable investor as having significantly altered the ‘total mix’

of information made available.”105 The question of materiality is “a context-specific

inquiry, and ‘[t]he myriad of detailed information that must be furnished to

shareholders necessarily differs from merger to merger.’”106

“Delaware disclosure law also proscribes misleading partial disclosures.” 107

“When fiduciaries undertake to describe events, they must do so in a balanced and

102 Id.

103 Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (quoting TSC

Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976)).

104 Id. (quoting TSC Indus., 426 U.S. at 449).

105 Id. (quoting TSC Indus., 426 U.S. at 449).

106 Dent v. Ramtron Int’l Corp., 2014 WL 2931180, at *11 (Del. Ch. June 30,

2014) (quoting Glassman v. Wometco Cable TV, Inc., 1989 WL 1160, at *5 (Del. Ch.
Jan. 6, 1989)).

107 Clements v. Rogers, 790 A.2d 1222, 1240 (Del. Ch. 2001).

38
accurate fashion, which does not create a materially misleading impression.” 108 Once

they travel down the road of partial disclosure, fiduciaries “ha[ve] an obligation to

provide the stockholders with an accurate, full, and fair characterization of th[e]

historic events” leading up to the transaction.109 “[T]he disclosure of even a non-

material fact can, in some instances, trigger an obligation to disclose additional,

otherwise non-material facts in order to prevent the initial disclosure from materially

misleading the stockholders.”110 The Delaware Supreme Court has cautioned that

“[b]oards, committees, and their advisors should take care in accurately describing

the events and the various roles played by board and committee members and their

retained advisors.”111

“Whether disclosures are adequate is a mixed question of law and fact.” 112 “At

the motion to dismiss stage, [the court] need not determine whether each disclosure

108 Id.

109 Arnold v. Soc’y for Sav. Bancorp, Inc., 650 A.2d 1270, 1280 (Del. 1994).

110 Zirn v. VLI Corp., 681 A.2d 1050, 1056 (Del. 1996).

111 City of Sarasota Firefighters’ Pension Fund v. Inovalon Hldgs., Inc., 319

A.3d 271, 304 (Del. 2024).

112 Zirn v. VLI Corp., 621 A.2d 773, 777 (Del. 1993); see Branson v. Exide Elecs.

Corp., 1994 WL 164084, at *3 (Del. Apr. 25, 1994) (TABLE) (noting that questions of
materiality “generally cannot be resolved on a motion to dismiss, but rather . . . must
be determined after the development of an evidentiary record”); Wells Fargo & Co. v.
First Interstate Bancorp., 1996 WL 32169, at *10 (Del. Ch. Jan. 18, 1996) (declining
to rule that an omission was immaterial as a matter of law because “[a] question of
materiality is difficult to treat as a question of law on a motion to dismiss,” and “[i]n
fact, issues of materiality are generally held to be mixed questions of law and fact,
39
deficiency, alone, is sufficient to find a breach.”113 Rather, the court must “look at the

disclosure allegations collectively.”114

The Complaint states a claim that the Proxy Statement did not contain all

material information necessary for the stockholder vote to be fully informed. The facts

alleged make it reasonably conceivable that five categories of material information

were either omitted or presented in a materially misleading way.

a. General Atlantic’s Conflicts

The first category concerns General Atlantic’s conflicts. One conflict was

General Atlantic’s desire for liquidity. The other conflict was General Atlantic

receiving a post-closing dividend of approximately $500 million. Both omissions state

reasonably conceivable disclosure claims.

Under Delaware law, stockholders are “entitled to know that certain of their

fiduciaries had a self-interest that was arguably in conflict with their own.”115 “Facts

that shed light on the depth of a lead negotiator’s commitment to the acquirer and

but predominantly questions of fact” and “are matters that in many instances require
a rich factual context to responsibly decide”).

113 Davidow v. LRN Corp., 2020 WL 898097, at *11 (Del. Ch. Feb. 25, 2020).

114 Id.

115 Eisenberg v. Chi. Milwaukee Corp., 537 A.2d 1051, 1061 (Del. Ch. 1987).

40
personal economic incentives are generally deemed material to a reasonable

stockholder.”116 While serving on this court, Chief Justice Strine explained that

a reasonable stockholder would want to know an important economic
motivation of the negotiator singularly employed by a board to obtain
the best price for the stockholders, when that motivation could
rationally lead that negotiator to favor a deal at a less than optimal
price, because the procession of a deal was more important to him, given
his overall economic interest, than only doing a deal at the right price.117

“Other precedents support the materiality of information that sheds light on the

financial incentives and motivations of directors who are involved in negotiating the

deal.”118 Although a proxy statement need not disclose every motive, information is

inferably material when it calls into question disclosures about the purpose of the

transaction.119

i. General Atlantic’s Liquidity Needs

General Atlantic played a central role in the Recapitalization, making its

motivations material. Rather than having its banker conduct the outreach to

potential buyers, the Committee authorized General Atlantic, Goldman, and

Company management to lead the effort. The Committee deferred to General

116 In re Mindbody, Inc. S’holders Litig., 2020 WL 5870084, at *27 (Del. Ch.

Oct. 2, 2020).

117 In re Lear Corp. S’holder Litig., 926 A.2d 94, 114 (Del. Ch. 2007).

118 Goldstein v. Denner, 2022 WL 1671006, at *23 (Del. Ch. May 26, 2022)

(citing In re Columbia Pipeline Gp., Inc., 2021 WL 772562, at *34 n.11 (Del. Ch. Mar.
1, 2021) (collecting authorities)).

119 Herd v. Major Realty Corp., 1990 WL 212307, at *10 (Del. Ch. Dec. 21, 1990);

see Eisenberg, 537 A.2d at 1059.

41
Atlantic’s preferences regarding the timeline and bid process. After Vista made its

“curveball” control bid, the Committee allowed General Atlantic to negotiate

governance issues with Vista while the Committee was negotiating price, despite

understanding that the two were interrelated. When determining whether to accept

Vista’s bid or ask for more, the Committee sought General Atlantic’s “blessing” and

waited for General Atlantic “to say ok to price.”120 Information about General

Atlantic’s motivations is material.

Failing to disclose facts giving rise to a significant need for liquidity can

constitute a material omission, and identifying other reasons for pursuing a

transaction without identifying a significant need for liquidity can create a partial

disclosure problem. Delaware decisions recognize that liquidity constitutes a benefit

that can amount to a fiduciary breach.121 But “liquidity-driven conflicts can be

120 Compl. ¶ 345 (quoting GA_00013002 at 007–08).

121 See McMullin v. Beran, 765 A.2d 910, 921–22, 926 (Del. 2000) (reversing

the Court of Chancery’s grant of a motion to dismiss a complaint, which alleged that
the company’s controller and its board designees “sacrific[ed] some of the value of [the
target]” to accommodate the controller’s “immediate need for cash”); In re PLX Tech.
Inc. S’holders Litig., 2018 WL 5018535, at *42 (Del. Ch. Oct. 16, 2018) (finding after
trial that two negotiators “had a divergent interest in achieving quick profits by
orchestrating a near-term sale” of the company), aff’d, 211 A.3d 137
(Del. 2019); In re Answers Corp. S’holder Litig., 2012 WL 1253072, at *7, *9 (Del. Ch.
Apr. 11, 2012) (denying a motion to dismiss after concluding that the complaint
adequately alleged that a large stockholder’s liquidity needs were a source of conflict
for the stockholder’s two board appointees); N.J. Carpenters Pension Fund v.
infoGROUP, Inc., 2011 WL 4825888, at *9–10 (Del. Ch. Sep. 30, 2011) (denying a
motion to dismiss after finding that allegations of a CEO’s “desperate[]” need for
liquidity supported an inference that the “liquidity benefit” constituted “a personal
benefit not equally shared by other shareholders”); Lear, 926 A.2d at 117 (issuing a
preliminary injunction where the CEO, “while negotiating the merger, had powerful
42
difficult to plead,”122 and Delaware courts “ha[ve] been reluctant to find [that] a

liquidity-based conflict” rises to the level of a disabling conflict of interest when a

large blockholder receives pro rata consideration because to reach such a conclusion

requires drawing the inference that “rational economic actors have chosen to short-

change themselves” to secure the near-term liquidity benefit.123

The Complaint therefore must allege facts that support a reasonable inference

that the liquidity need rose to the level of a disabling conflict. Several decisions from

this court have concluded that complaints adequately alleged a divergent interest

based on liquidity needs. In infoGROUP, the complaint alleged that the blockholder

owed $25 million, had no sources of income, recently had paid out $4.4 million, and

wanted to start a new business venture.124 In Answers, the complaint alleged that the

stockholder wanted to achieve a near-term sale, could not effectively generate

liquidity because of the thinly traded market for the company’s stock, and curtailed

the sale process by taking actions that ran contrary to the advice of the company’s

investment banker.125 Most recently, in Mindbody, the CEO of the target company

interests to agree to a price and terms suboptimal for public investors so long as the
resulting deal” yielded certain benefits, including “allow[ing] him to promptly
liquidate his equity holdings”).

122 Mindbody, 2020 WL 5870084, at *33.

123 Larkin v. Shah, 2016 WL 4485447, at *16 (Del. Ch. Aug. 25, 2016).

124 See infoGROUP, 2011 WL 4825888, at *2, *9.

125 See Answers, 2012 WL 1253072, at *1–2, *7.

43
candidly explained in a post-merger interview that his capital had been locked up in

the company for years and that he had only been able to “sell tiny bits of it” through

a Rule 10b5-1 plan, a situation he analogized to “sucking through a very small

straw.”126 The complaint also supported an inference that the CEO’s “personal

finances [were] stretched” leading up to the sale process.127 Although he did not face

a liquidity crisis, he had to meet a series of obligations, including a multi-million

pledge to a local college, a seven-figure home renovation project, and payments on a

sizeable mortgage.128 He also wanted to make “a six-figure investment in his son’s

start-up company, a six-figure loan to a friend, and another six-figure investment in

a new venture.”129 Evidencing his focus on liquidity, he drew on a line of credit and

increased his periodic sales of stock.130

The Complaint adequately pleads that the Proxy Statement omitted material

information about General Atlantic’s desire for liquidity and its effect on the

Recapitalization. It is inferable that General Atlantic needed liquidity by early 2022.

The General Atlantic funds holding the investment in the Company were nearing the

end of their ten-year lifecycles. Some of the limited partners were pressing to get their

126 Mindbody, 2020 WL 5870084, at *3.

127 Id.

128 Id.

129 Id.

130 Id. at *3, *18.

44
capital back. General Atlantic needed cash to a degree that it was contemplating an

IPO of its own. Around the same time, Stamas and Bennett met with Vista and asked

Goldman to present to the Board on “liquidity for shareholders.”131 When Vista

deferred its proposal, General Atlantic and Goldman brainstormed alternatives to

generate liquidity, including a secondary offering. The Company subsequently

announced a secondary offering of eight million shares owned by General Atlantic,

Summit, and management, priced below the prior day’s closing price.

It is also inferable that General Atlantic’s desire for liquidity shaped the

Recapitalization. The bid process letter asked all potential bidders to address the

amount of funds to be used for a distribution of proceeds to General Atlantic. When

negotiations with Vista ramped up, General Atlantic negotiated governance issues—

including its liquidity rights—concurrently with the price negotiations. As part of its

demands, General Atlantic introduced the concept of the Company taking on debt to

support an additional payout to General Atlantic. At the estimated level of debt in

the Recapitalization, General Atlantic was able to sell 74% of its pre-closing equity

into the offer, roll over the remaining 26% in exchange for 35% of the post-closing

equity, and receive a dividend of $500 million. Internally, General Atlantic recognized

the implications of the debt negotiation for the consideration it would receive.132 The

131 Compl. ¶ 372 (quoting GA_00009400 at 400).

132 See id. ¶ 388 (quoting GA_00003546).

45
Complaint’s factual allegations easily support the inference that the Proxy Statement

failed to disclose material information about General Atlantic’s motivations.

The Complaint also adequately pleads a partial disclosure problem. The Proxy

Statement stated that General Atlantic pursued the Recapitalization to provide

“liquidity for the unaffiliated security holders of EngageSmart without the delays

that would otherwise be necessary in order to liquidate the positions of larger holders,

and without incurring brokerage and other costs typically associated with market

sales.”133 That statement is inferably misleading as a partial disclosure because it

implies that General Atlantic pursued the Recapitalization for the good of the

unaffiliated stockholders without disclosing facts necessary to understand General

Atlantic’s own liquidity needs.

ii. The $500 Million Dividend

The Proxy Statement also fails to disclose a material term of the

Recapitalization: the $500 million dividend. The Proxy Statement discusses that

General Atlantic received $23 per share for the shares it sold. The Proxy Statement

fails to disclose that the Recapitalization also involved the Company paying General

Atlantic $500 million. The Proxy Statement depicted the Recapitalization to the

world as a deal in which a controlling stockholder received the same consideration as

the public stockholders, when in fact the controlling stockholder secured a secret and

undisclosed control premium.

133 Ex. D at 75.

46
The defendants argue that the dividend was immaterial because General

Atlantic negotiated the same headline price of $23 per share for all selling

stockholders. The defendants argue that because General Atlantic was selling equity

at the same price as the public stockholders, General Atlantic’s interests were aligned

with the public stockholders’ interests. But the price the public stockholders received

was only one of three forms of consideration that General Atlantic received. General

Atlantic also received the $500 million dividend and equity in the post-transaction

entity. The funding for the Recapitalization likewise flowed through three channels:

(i) Vista’s cash contributions, (ii) debt the Company would take on, and (iii) equity

that General Atlantic would roll over.

For some dimensions of the Recapitalization, General Atlantic’s interests were

aligned with the minority stockholders. When General Atlantic negotiated with Vista

over how much cash Vista would contribute, General Atlantic had the same goal as

the public stockholders: get Vista to contribute as much cash as possible. That was a

pie-growing negotiation, because Vista’s cash contribution added to the total

economic value of the Company.134 Eventually, some of that cash would go to the

selling stockholders, including both General Atlantic and the public minority, and

some of it would go to General Atlantic through the dividend. Vis-à-vis Vista,

however, everyone on the sell-side had the same interest: get Vista to pay more and

134 See generally Alex Edmans, Grow the Pie: How Great Companies Deliver

Both Purpose and Profit (2020).

47
create greater overall value for all the Company’s stockholders to divide. The same is

true for how much debt the Company would take on. The more debt the Company

carried, the more cash would be available for the existing stockholders to divvy up,

with some going to the selling stockholders and some to fund the dividend.

But the Recapitalization also involved pie-cutting issues. The cash and the

post-transaction equity represented a single pie of value that three parties—Vista,

General Atlantic, and the public stockholders—would divvy up. Most plainly, the

division of cash between the selling stockholders and the dividend was a pie-cutting

negotiation in which General Atlantic and the selling stockholders competed for the

pool of cash. For that aspect of the Recapitalization, the minority stockholders and

General Atlantic had conflicting interests. The minority stockholders wanted the

highest purchase price possible, while General Atlantic wanted the maximum

consideration across both the purchase price and the dividend. Because General

Atlantic stood to receive less than 100% of the purchase price and 100% of the

dividend, General Atlantic had an incentive to take more of its consideration through

the dividend and less through the purchase price.

The bid process letter shows that General Atlantic had different interests. The

letter specifically asked bidders to address “a distribution of proceeds to the non-

selling shareholder,” code for a side payment to General Atlantic.135 General

Atlantic’s internal modeling also illustrated the conflict: a price increase of $0.50 per

135 Compl. ¶ 368 (quoting SA-ESMT0009274 at 275).

48
share for selling stockholders would result in an overall decrease of approximately

$70 million in General Atlantic’s total liquidity.

The Proxy Statement therefore could not omit disclosing the post-closing

dividend. By failing to disclose that General Atlantic received an additional $500

million, the Proxy Statement created the materially misleading impression that

General Atlantic and the public stockholders received the same per-share

consideration.

In fact, the disclosure problem was even worse. The Proxy Statement stated

that the Committee had considered a merger agreement that contemplated a pre-

closing dividend but rejected it because “a pre-closing dividend would have adverse

consequences for certain stockholders unaffiliated with General Atlantic.”136 This

description gave a misleading impression that the Committee did not authorize a

dividend. While the adjective “pre-closing” might technically make the statement

correct, it remains misleading. The statement implies that the Committee understood

the zero-sum nature of the allocation between the price the selling stockholders

received and a dividend for General Atlantic. The disclosure implies that the

Committee addressed that conflict and protected the interests of the public

stockholders. The Proxy Statement fails to disclose that General Atlantic also

received a $500 million post-closing dividend.

136 Ex. D at 46.

49
The Complaint supports a reasonably conceivable inference that the Proxy

Statement failed to provide the stockholders with material information about General

Atlantic’s liquidity motivations. It is reasonable to infer that the stockholder vote was

not fully informed.

b. Financial Advisor Conflicts

The second category of disclosure issues concerns financial advisor conflicts. It

is reasonably conceivable that the Proxy Statement omitted material information

about Goldman’s and Evercore’s conflicts.

“Because of the central role played by investment banks in the evaluation,

exploration, selection, and implementation of strategic alternatives, this Court has

required full disclosure of investment banker compensation and potential

conflicts.”137 “It does not matter whether the financial advisor’s opinion was

ultimately influenced by the conflict of interest; the presence of an undisclosed

conflict is still significant.”138 “There is no rule that conflicts of interest must be

disclosed only where there is evidence that the financial advisor’s opinion was

actually affected by the conflict.”139 “[I]t is imperative for the stockholders to be able

to understand what factors might influence the financial advisor’s analytical efforts .

137 In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 832 (Del. Ch. 2011).

138 City of Dearborn Police & Fire Revised Ret. Sys. v. Brookfield Asset Mgmt.

Inc., 314 A.3d 1108, 1132 (Del. 2024).

139 Id. (cleaned up) (quoting In re John Q. Hammons Hotels Inc. S’holder Litig.,

2009 WL 3165613, at *16 (Del. Ch. Oct. 2, 2009)).

50
. . .”140 The key question is whether the information “would have been material to a

stockholder in assessing [a financial advisor]’s objectivity.”141 Concurrent

engagements with entities and individuals are material facts that must be disclosed

to stockholders.142

i. Goldman

The plaintiffs contend that the Proxy Statement falsely portrayed Goldman as

a neutral financial advisor for the Company. The Complaint sufficiently alleges that

the Proxy Statement omitted material information about Goldman’s conflicts of

interest with Vista, General Atlantic, and Summit.

A proxy statement must state whether a financial advisor has business

relationships with the issuer’s transactional counterparty. A financial advisor cannot

give a mealy-mouthed disclosure that it “may” have business relationships. The

Delaware Supreme Court has twice held that it is materially misleading to use “may”

to refer to a financial advisor’s then-existing material conflicts with a transactional

140 RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 860 (Del. 2015) (internal

quotation marks omitted); accord Inovalon, 319 A.3d at 292 & n.118.

141 Brookfield, 314 A.3d at 1132.

142 E.g., id. at 1134 (“[W]e hold that it is reasonably conceivable that the details

of Kirkland’s conflicts, and particularly, the concurrent conflict, were material facts
for stockholders that required disclosure.”); Inovalon, 319 A.3d at 294 (“Evercore’s
concurrent representation, in unrelated transactions, of Nordic, the bidder of the
Company, and Insight, a co-investor, were material facts.”).

51
counterparty.143 That type of disclosure is incorrect in its own right because the

conflict is actual, not possible or potential. It is also misleading in that it “makes it

less likely that a stockholder would have been prompted to locate [the financial

advisor]’s [counterparty] holdings in its publicly filed form 13F.” 144 The Delaware

Supreme Court has also found a proxy statement to be materially misleading when

it failed to disclose the amounts the financial advisor had received from another

transaction party.145

According to the Complaint, the Proxy Statement did not disclose that

Goldman was concurrently advising Vista (including Wilson) on other transactions

for Vista portfolio companies Allvue Systems, LLC and Alegeus Technologies, LLC.

The Proxy Statement did not disclose that Goldman was concurrently assisting Vista

with a $1 billion cash injection in Finastra in September 2023. The Proxy Statement

143 Brookfield, 314 A.3d at 1133; Inovalon, 319 A.3d at 293–95.

144 Brookfield, 314 A.3d at 1133.

145 Inovalon, 319 A.3d at 295–97 (“[A]bsent disclosure of the amount of the fees,

the stockholders could not compare J.P. Morgan’s concurrent fees from counterparties
with the fees collected from the Company in this Transaction — approximately $42
million. This lack of disclosure prevented stockholders from contextualizing and
evaluating J.P. Morgan’s concurrent conflicts of interest. We hold that it is reasonably
conceivable that J.P. Morgan’s concurrent conflicts with counterparties to the
Transaction would have altered the total mix of information available to stockholders
and, therefore, should have been disclosed.” (footnotes omitted)). See Brookfield, 314
A.3d at 1130–33 (“It is reasonably conceivable that from the viewpoint of a
stockholder, Morgan Stanley’s nearly half a billion-dollar holding in Brookfield was
material and would have been material to a stockholder in assessing Morgan
Stanley’s objectivity. . . .”).

52
did not disclose that Goldman concurrently had a lending relationship with Vista

under which Goldman had extended the firm an unsecured $1.5 billion loan. The

Proxy Statement did not disclose that Goldman concurrently had a lending

relationship with Vista Management Holdings, Inc. under which Goldman had

extended that entity a $50 million revolver loan.

Rather than disclosing specific facts about these engagements, the Proxy

Statement stated that Goldman “may also in the future provide financial advisory

and/or underwriting services to EngageSmart, Vista, General Atlantic and their

respective affiliates” for which Goldman “may receive compensation.”146 The Proxy

Statement also disclosed that affiliates of Goldman “may have co-invested with Vista,

General Atlantic and their respective affiliates from time to time . . . and may do so

in the future.”147 The Proxy Statement disclosed that Goldman’s investment banking

unit received $87.4 million in fees from Vista for services rendered in the past two

years.148

Those disclosures track the generalized statements that the Delaware

Supreme Court found inadequate in Inovalon. There, the proxy statement disclosed

that the company’s financial advisor “may provide financial advisory or other services

to the Company and the Acquiror and their respective affiliates, including Nordic

146 Ex. D at 105.

147 Id.

148 Id.

53
Capital X, GIC, Insight and their respective affiliates” for which the advisor “may

receive compensation.”149 The Delaware Supreme Court held that the disclosure was

inadequate.150 The same is true here. It is reasonably conceivable that the Proxy

Statement omitted material information about Goldman’s relationships with Vista.

The defendants argue that a similar level of disclosure was not required

because Goldman was the Company’s financial advisor, not the Committee’s financial

advisor, and because Goldman did not render a fairness opinion. “‘[B]ecause of the

central role played by investment banks in the evaluation, exploration, selection, and

implementation of strategic alternatives,’ Delaware courts have required full

disclosure of investment banker compensation and potential conflicts.”151 This

requirement is not inherently limited to bankers hired by special committees or

bankers that render fairness opinions. For example, receiving a fairness opinion from

a “supposedly conflict-cleansing” financial advisor with a “secondary” role in the

valuation process does not obviate the need for disclosure about the “primary”

financial advisor’s conflicts.152

149 Inovalon, 319 A.3d at 293; see Brookfield, 314 A.3d at 1133 (proxy statement

was misleading when it used “may” to describe an advisor’s interest in a
counterparty).

150 Inovalon, 319 A.3d at 293–25.

151 Id. at 292 (quoting Del Monte Foods, 25 A.3d at 832).

152 See RBC Cap. Mkts., 129 A.3d at 863–65 (“The Board’s receipt of Moelis’s

financial analysis—which the Special Committee treated as ‘secondary’ to that of
RBC—does not remedy RBC’s improper conduct, nor does it destroy the causal link
between RBC’s actions, the Board’s failure to satisfy itself of its fiduciary obligations,
54
Goldman’s central role in the sale process renders the defendants’ argument

untenable. Goldman was the principal banker running the sale process. The

Committee authorized Goldman, General Atlantic, and the Company to work

together on outreach to potential buyers, and General Atlantic and Goldman shaped

the effort. After other bidders had submitted their first-round bids, Goldman tipped

Vista with pricing information that no other bidder received. Throughout the process,

Goldman tried to sideline Evercore for reasons akin to a middle-school status

competition. By trying to exclude Evercore, Goldman impaired the Committee’s

ability to oversee the transaction process. Having sought to exclude Evercore and

thumped its chest internally over its principal role, Goldman cannot now claim its

conflicts were immaterial.

The defendants also respond that some of the omitted information was publicly

available. Under Delaware law, stockholders are not required to “go on a scavenger

hunt” for material information about conflicts,153 particularly when a proxy

statement contains disclosures that could throw a stockholder off the scent. The

and the harm suffered by the Company’s stockholders.”). See also Ortsman v. Green,
2007 WL 702475, at *1–2 (Del. Ch. Feb. 28, 2007). In Ortsman, a conflict arose for
the company’s “lead” advisor for the sale process, so the company retained a second
advisor to issue a fairness opinion. Id. at *1. According to the complaint, the lead
advisor’s conflict still impacted the sale process. Id. The proxy statement allegedly
failed to disclose “issues relating to [the lead advisor]’s conflicted role in the deal” and
“fees paid to [the lead advisor] and [the second advisor] in this and other recent
transactions involving the members of the buyer group.” Id. The court found there
were “colorable disclosure claims.” Id. at *2.

153 Vento v. Curry, 2017 WL 1076725, at *3–4 (Del. Ch. Mar. 22, 2017).

55
defendants cannot sidestep their duty to disclose information in the Proxy Statement

by saying it might be found elsewhere.

Just as the Complaint states a claim regarding its description (and non-

description) of Goldman’s conflicts of interest with Vista, the Complaint states a claim

regarding Goldman’s conflicts of interest with General Atlantic. The same principles

of disclosure apply.

The Proxy Statement failed to include material information about Goldman

and General Atlantic’s long-standing relationship, including concurrent

engagements. The Proxy Statement did not disclose that Goldman was concurrently

advising General Atlantic in its take-private of HireRight and concurrently advising

a General Atlantic portfolio company, Capital Foods, on strategic alternatives. The

Proxy Statement did not disclose that Goldman was concurrently advising and

marketing at least three General Atlantic funds. The Proxy Statement did not

disclose that Goldman was concurrently maintaining lending relationships with

General Atlantic, including one €300 million loan, another $150 million loan, and a

$50 million revolver. The Proxy Statement did not disclose that Goldman and General

Atlantic made co-investments in at least six different companies, including at least

one co-investment initiated during the transaction process. It is inferable that

Goldman’s ties to General Atlantic motivated Goldman to shape the bidding process

so that it favored General Atlantic’s interests.

The defendants argue that the Proxy Statement disclosed some information

about Goldman’s relationship with General Atlantic, and that was enough. According

56
to the defendants, no stockholder reading the Proxy Statement could have been

confused about Goldman and General Atlantic’s relationship or Goldman’s role.

Rather than being enough, that type of partial disclosure creates a disclosure

problem.154 “When a document ventures into certain subjects, it must do so in a

manner that is materially complete and unbiased by the omission of material

facts.”155 “Even if the additional information independently would fall short of the

traditional materiality standard, it must be disclosed if necessary to prevent other

disclosed information from being misleading.”156 In line with these principles, the

Delaware Supreme Court has found a proxy statement to be materially misleading

when it contained a partial disclosure of a financial advisor’s conflict but failed to

make a full disclosure.157

154 See Clements, 790 A.2d at 1240; Zirn, 681 A.2d at 1056.

155 In re Pure Res., Inc., S’holders Litig., 808 A.2d 421, 448 (Del. Ch. 2002).

156 PLX Tech., 2018 WL 5018535, at *37.

157 RBC Cap. Mkts., 129 A.3d at 860–63 (“RBC further urges that stockholders

reading the Proxy Statement knew that RBC operated with a potential conflict and
that disclosure of that potential conflict was sufficient. . . . The Proxy Statement’s
discussion of RBC’s right to offer staple financing was a partial disclosure. . . . The
Proxy Statement failed to disclose how RBC used the Rural sale process to seek a
financing role in the EMS transaction. Nor did it disclose RBC’s courtship of
Warburg. When viewed in conjunction with the potential fees RBC was to receive for
its financing services, the investment bank’s pursuit of Warburg’s financing business
was demonstrative of a conflict that was unquestionably material, and necessitated
full and fair disclosure for the benefit of the stockholders.”).

57
To be sure, the Proxy Statement disclosed that Goldman had a “long-standing

relationship” with General Atlantic and therefore “would not be an advisor to the

Special Committee.”158 It also disclosed that Goldman’s investment banking unit

received approximately $45 million in fees from General Atlantic in the two years

preceding October 2023.159 And the Proxy Statement disclosed that General Atlantic

and Goldman discussed a potential transaction involving the Company in June and

July 2023.160 It also disclosed that General Atlantic often communicated with the

Committee and Evercore “through representatives of Goldman.”161

But those are partial disclosures. They make the disclosure problems worse,

not better.

Finally, the Complaint supports a reasonably conceivable inference that the

Proxy Statement omitted material information about Goldman’s relationship with

Summit. The Proxy Statement failed to disclose that Goldman earned approximately

$25 million in fees from Summit in the prior two years. While that might seem like

small potatoes in the financial world, a Summit representative served on the

Committee, making the relationship material. It is also a partial disclosure problem

158 Ex. D at 33, 35.

159 Id. at 105.

160 Id. at 32.

161 Id. at 47–49.

58
because Goldman disclosed some facts about its relationships with other transaction

participants, suggesting that Goldman had no relationship with Summit.

ii. Evercore

The plaintiffs similarly contend that the Proxy Statement gave a false and

misleading impression about the extent of Evercore’s conflicts. The Complaint

sufficiently alleges that the Proxy Statement omitted material information about

Evercore’s relationships with General Atlantic, Vista, and Summit.

Compensation a financial advisor has received from another transaction party

can be material to a stockholder trying to evaluate the advisor’s objectivity and

conduct.162 Information about prior engagements provides insight into the magnitude

of a relationship.163 Although a brightline disclosure requirement would make a lot

162 E.g., Inovalon, 319 A.3d at 295–97; Rodden v. Bilodeau, C.A. No. 2019-0176-

JRS, at 18, 20–21 (Del. Ch. Jan. 27, 2020) (TRANSCRIPT); Kihm v. Mott, 2021 WL
3883875, at *18 (Del. Ch. Aug. 31, 2021) (“When a financial advisor faces a conflict,
this Court has generally required disclosure of the relationship itself and the amount
of fees the advisor received. It has rejected requests for more granular details about
the specific services rendered by the advisor, or overlapping deal team members.”
(internal quotation marks and footnotes omitted)), aff’d, 276 A.3d 462 (Del. 2022)
(TABLE); In re Saba Software, Inc. S’holder Litig., 2017 WL 1201108, at *11 (Del.
Ch. Mar. 31, 2017) (“What was material, and disclosed, was the prior working
relationship and the amount of fees.”).

163 Rodden v. Bilodeau, C.A. No. 2019-0176-JRS, at 18, 20–21 (Del. Ch. Jan.

27, 2020) (TRANSCRIPT) (finding it reasonably conceivable that payments in the two
years preceding the merger to its financial advisor totaling $9 million (consisting of
$4.9 million by the target and $4.1 million by the acquirer) would be deemed material
because disclosure of those payments would help the target’s stockholders to
“contextualize the magnitude of the [financial advisor]’s conflict of interest”). See
Inovalon, 319 A.3d at 297 (holding that proxy statement’s disclosure that advisor
received “customary compensation” without disclosing the amount of fees “prevented
59
of sense and be easier to administer, “there is no hard and fast rule that requires

financial advisors to always disclose the specific amount of their fees from a

counterparty in a transaction.”164 “Rather, the materiality standard governs whether

a financial advisor’s exact amount of fees collected from a counterparty to a

transaction requires disclosure.”165

The Proxy Statement did not disclose that in the past five years, Evercore

earned (i) approximately $41 million from General Atlantic, (ii) approximately $18.5

million from Vista, and (iii) approximately $36 million from Summit and its portfolio

companies. The Proxy Statement also did not disclose that Evercore was concurrently

advising Summit on at least one transaction, that Hamilton told a colleague that

when hiring the Committee’s financial advisor, he was “trying to curry favor with

some places that tend to show [Summit] more deal flow,”166 or that after the parties

agreed to the Recapitalization, Hamilton told his colleague to leverage the Evercore

engagement to secure another Evercore-advised deal.167

stockholders from contextualizing and evaluating J.P. Morgan’s concurrent conflicts
of interest”).

164 Inovalon, 319 A.3d at 296.

165 Id.

166 Compl. ¶ 110 (quoting SC-00000823 at 824).

167 Id. ¶ 192 (quoting SC-00006113 at 113–14).

60
Instead, the Proxy Statement stated only that Evercore and affiliates “have

provided financial advisory services” to General Atlantic, Vista, and their respective

affiliates and portfolio companies, and “received fees for the rendering of these

services.”168 The Proxy Statement also stated that Evercore and its affiliates “may

provide” similar services and “may receive compensation” in the future.169

As with similarly generic statements about Goldman, those statements about

Evercore are materially misleading. The Complaint supports an inference that

Evercore received material amounts of fees from General Atlantic, Vista, and

Summit. Those amounts needed to be disclosed. The Complaint also supports an

inference that the Proxy Statement was materially misleading because it failed to

disclose that Hamilton retained Evercore in part to generate additional deal-flow for

Summit.

c. The Players’ Roles

A third category of disclosure issues involves the respective roles of Goldman,

Evercore, and the Committee. The section of a proxy statement that describes the

background of the transaction is not a roadshow sales document. It calls for a

factually accurate description of what took place. “Boards, committees, and their

advisors should take care in accurately describing the events and the various roles

168 Ex. D at B-3.

169 Id.

61
played by board and committee members and their retained advisors.” 170 A disclosure

that suggests “a more active role for [the special committee’s advisor] takes on added

significance in a scenario where [the company’s advisor], as the lead advisor, faced

conflicts.”171 In Inovalon, the Delaware Supreme Court found the proxy misleading

because it portrayed the special committee’s advisor as being “in a better position

than it actually was to mitigate any effects of [the company advisor]’s conflicts,” and

where the special committee advisor’s own conflicts and its “secondary and more

limited role in the outreach process” limited its effectiveness.172 Allegations about

advisor conflicts and a special committee’s more limited role “could make a difference

to stockholders in analyzing and weighing the advice of the advisors and in evaluating

the overall effectiveness of the market outreach.”173

The Proxy Statement portrayed the Committee as leading the process. It

claimed that the Committee “had independent control of the extensive negotiations

with the members of [General Atlantic and Vista] and their respective advisors on

behalf of the unaffiliated security holders.”174 It asserted that the Committee had

extensive arm’s length negotiations with General Atlantic, Vista, and other bidders.

170 Inovalon, 319 A.3d at 304.

171 Id.

172 Id.

173 Id.

174 Ex. D at 76–77.

62
It described Evercore and Goldman as co-advisors on process decisions, bidder

outreach, and negotiations.

The Complaint pleads facts that undercut those descriptions. General Atlantic

and Goldman inferably sidelined the Committee and Evercore on process decisions,

bidder outreach, and negotiations. General Atlantic and Goldman drove the decision

to limit the canvass to financial buyers interested in a minority position. Goldman

then excluded Evercore from transaction-related communications, resulting in

General Atlantic and Goldman engaging directly with bidders without input from the

Committee or Evercore. General Atlantic negotiated pricing and governance terms

with Vista directly and concurrently. Rather than making the final decision on price,

the Committee waited for General Atlantic’s blessing.

At the pleading stage, the Complaint supports an inference that the process

actually unfolded quite differently than what the Proxy Statement depicts. The

Complaint’s allegations rely on contemporaneous internal documents, not mere

allegations. It is reasonably conceivable that the Proxy Statement was materially

misleading when depicting the Committee as having independent control of

negotiations with General Atlantic and Vista.

d. Other Bidders

The fourth category of disclosure issues concerns other bidders. The Complaint

supports a reasonable inference that the Proxy Statement misleadingly described the

interactions with other bidders and created a false impression that there were no

other credible bidders.

63
“In cases involving publicly traded companies, sell-side fiduciaries must

provide their stockholders with an accurate, full, and fair description of significant

meetings or other interactions between target management and a bidder.” 175 Third

party inquiries and informal offers are material and must be disclosed.176 At the same

time, proxy materials need not state “insignificant details,”177 nor must they state the

“plaintiff’s characterization of the facts.”178

The Proxy Statement did not disclose that Francisco Partners and Hg Capital

were actively evaluating the Company and working toward improving their offers

during the bid solicitation period. The Proxy Statement states that Hg Capital “never

requested a dinner meeting,” but that was not true.179 The Proxy Statement also

175 In re Columbia Pipeline Gp., Inc. Merger Litig., 299 A.3d 393, 486–87 (Del.

Ch. 2023), rev’d on other grounds, 342 A.3d 324 (Del. 2025); see In re Mindbody, Inc.
S’holder Litig., 2023 WL 2518149, at *39 (Del. Ch. Mar. 15, 2023) (“Although a
fiduciary need not give a play-by-play account, when fiduciaries choose to provide the
history of a transaction, they have an obligation to provide shareholders with an
accurate, full, and fair characterization of those historic events.” (internal quotation
marks omitted)), aff’d in part, rev’d in part on other grounds, 332 A.3d 349 (Del. 2024).

176 In re Grace Energy Corp. S’holders Litig., 1992 WL 145001, at *5 (Del. Ch.

June 26, 1992).

177 In re Merge Healthcare Inc. S’holders Litig., 2017 WL 395981, at *9 (Del.

Ch. Jan. 30, 2017).

178 Teamsters Loc. 677 Health Servs. & Ins. Plan v. Martell, 2023 WL 1370852,

at *15 n.168 (Del. Ch. Jan. 31, 2023) (internal quotation marks omitted).

179 Ex. D at 46.

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misleadingly describes Francisco Partners’ and Hg Capital’s feedback during the go-

shop period.

This is another example of parties inferably treating the Proxy Statement like

a roadshow sales pitch. It is reasonable to infer that the disclosures regarding

alternative bidders failed to provide the stockholders with the material information

necessary for the vote to be fully informed.

e. Hamilton’s Independence

The fifth category of disclosure issues concerns Hamilton’s independence.

Although it is not reasonably conceivable that the Proxy Statement omitted material

information about Hamilton’s independence as it relates to Summit’s liquidity

interests, it is reasonably conceivable that the Proxy Statement omitted material

information about Hamilton’s ties to General Atlantic and Vista, as well as his use of

his role on the Committee to generate good will for Summit.

“A director’s conflict with a transactional counterparty is material information

that should be disclosed.”180 “In fact, a director’s potential conflict with a transactional

counterparty is material information that should be disclosed.”181 “Where . . . omitted

information goes to the independence or disinterest of directors who are identified as

the company’s ‘independent’ or ‘not interested’ directors, the relevant inquiry is not

180 Tornetta v. Musk, 310 A.3d 430, 522–23 (Del. Ch. 2024), rev’d on other

grounds sub nom. In re Tesla, Inc. Deriv. Litig., 2025 WL 3689114 (Del. Dec. 19, 2025).

181 Id. at 523.

65
whether an actual conflict of interest exists, but rather whether full disclosure of

potential conflicts of interest has been made.”182

The plaintiffs allege that the Proxy Statement’s description of Hamilton’s

independence was misleading because Summit, like General Atlantic, faced a

liquidity conflict. But the Complaint’s allegations do not support that inference. As a

large stockholder that sold into the transaction, Summit’s interests were generally

aligned with the other minority stockholders.

As discussed previously, the failure to disclose facts supporting a material

desire for liquidity can give rise to a material omission. But here, the plaintiffs’ sole

basis for asserting that Summit needed liquidity was that its funds were approaching

the end of their ten-year lifecycle.

That allegation closely resembles what the court has rejected as insufficient.183

Investment fund managers cycle through a multi-year process of raising capital for a

182 Millenco L.P. v. meVC Draper Fisher Jurvetson Fund I, Inc., 824 A.2d 11,

15 (Del. Ch. 2002) (internal quotation marks omitted).

183 See, e.g., Firefighters’ Pension Sys. of City of Kan. City, Mo. Tr. v. Presidio,

Inc., 251 A.3d 212, 258–59 (Del. Ch. 2021) (collecting cases); Mindbody, 2020 WL
5870084, at *34 (rejecting liquidity-driven conflict theory on a fixed-life investment
fund having “a 2018 target date to liquidate its Mindbody investment,” which already
had passed by the time of the sale); In re Crimson Expl. Inc. S’holder Litig., 2014 WL
5449419, at *19 (Del. Ch. Oct. 24, 2014) (rejecting liquidity-driven conflict theory
advanced in complaint that alleged that investment firm “usually holds its assets for
five years, but has held its interest in [the relevant company] for eight” and that the
firm’s “longer-than-normal investment in [the company] reflected the illiquid size of
its control block”); In re Morton’s Rest. Gp., Inc. S’holders Litig., 74 A.3d 656, 667–68
(Del. Ch. 2013) (rejecting liquidity-driven conflict theory based on allegation that
private equity fund “pressured the board to sell Morton’s quickly” so that it could
either “get some liquidity to reinvest in its new [fund]” or “cash out the investors in
66
new fund, launching the fund, investing the fund’s capital, managing the

investments, and then harvesting the investments, with the industry standard for a

fund’s lifespan generally set at ten years. The desire to wrap up an existing fund or

provide investors with realizations can affect a fund manager’s incentives.184 But the

process “is not so formulaic and structured that the cycle itself would support an

inference of a liquidity-based conflict.”185 Put differently, the business model alone

does not create a problematic interest.186

The plaintiffs therefore had to plead more to support an inference that

Summit’s interest in liquidity gave rise to a conflict for Hamilton. The Complaint fails

in that effort.

[Morton’s] [so that] those investors would have money to reinvest in [the new fund]”);
see also Chen v. Howard-Anderson, 87 A.3d 648, 671–72 (Del. Ch. 2014) (granting
summary judgment after rejecting liquidity-driven conflict theory, which argued that
institutional investor supported a near-term sale so that it could wind down a fund
that was scheduled to terminate a year earlier).

184 Presidio, 251 A.3d at 258; see Frederick Hsu Living Tr. v. Oak Hill Cap. P’rs

III, L.P., 2020 WL 2111476, at *8–18 (Del. Ch. May 4, 2020) (detailing evidence that
established that private equity fund manager instructed its partners to focus on
achieving exits and monetizing investments to show returns of capital that would be
favorable for raising a new fund); In re Trados Inc. S’holder Litig. (Trados I), 2009
WL 2225958, at *2 & n.2, *7 (Del. Ch. July 24, 2009) (reviewing internal emails and
reports which showed that fund managers wanting to sell quickly to close out a long-
held investment to focus on other, more promising investments).

185 Presidio, 251 A.3d at 258.

186 Id.; Larkin, 2016 WL 4485447, at *15–17.

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By contrast, the Proxy Statement inferably omits material information about

Hamilton’s ties to General Atlantic and Vista. Summit has long-standing ties to both

firms spanning over a decade that would inferably cause Hamilton to favor General

Atlantic and Vista’s interests to preserve those relationships. A generalized

allegation about a historical relationship would not be sufficient, but the Complaint’s

allegations are specific, detailed, and lengthy:

• In 2014, Vista acquired an on-demand talent management solutions provider
in which Summit was a substantial investor.

• In 2017, Vista acquired a software company from Summit. Also in 2017,
General Atlantic provided an exit for Summit by purchasing its stake in a
consumer analytics company.

• In 2018, Vista sold Summit a majority stake in a global provider of cloud-based
financial software while retaining a minority interest. Also in 2018, General
Atlantic acquired Summit’s stake in a French fashion brand as part of its
purchase of a 45% interest. And in 2018, General Atlantic acquired a majority
stake in the Company, where Summit was already a significant investor.

• In 2019, General Atlantic and Summit acquired a majority stake in a beauty
company and co-invested in its parent.

• In 2020, Vista purchased a majority stake in a customer-relations technology
company backed by Summit.

• In 2021, General Atlantic invested $163 million in a cloud-based software
provider, supporting prior investments by Summit totaling $305 million. Also
in 2021, General Atlantic and Summit jointly took the Company public. They
are also parties to the Governance Agreement.

• In early 2022, just months before the Committee was formed, a General
Atlantic portfolio company acquired a Summit portfolio company Appway with
Summit retaining a minority interest.

• In February 2023, General Atlantic invested in an operations management
software provider as part of a $100 million round where Summit was an
existing investor and also participated in the round.

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• In 2024, General Atlantic acquired a majority stake in a sustainability
assessment provider from Summit, which retained a minority position.

At this point in history, there are approximately 19,000 private equity funds in the

United States, outnumbering the 14,000 McDonald’s locations by a sizable margin.187

There are around 4,500 public companies, plus around 215,000 private equity-backed

or venture capital-backed portfolio companies.188 Given those figures, the base rate of

incidental, non-relationship-based firm-to-firm interaction should be relatively low,

making the degree of interaction among Summit, General Atlantic, and Vista

inferably significant.

In addition to those historical relationships, the Complaint alleges that when

the Committee looked for a financial advisor, Hamilton told a colleague that he was

“trying to curry favor with some places that tend to show [Summit] more deal flow.”189

After the parties agreed to the Recapitalization, Hamilton learned that a colleague

was “chasing” a deal involving an Evercore client. Hamilton told his colleague that

he delivered “$25M to EVR for a short sprint”190 and that the colleague should “use

187 Sridhar Natarajan & Allison McNeely, ‘Crazy, Right?’: More PE Funds Than

McDonald’s Signals Pressure, Bloomberg (Oct. 1, 2025),
bloomberg.com/news/articles/2025-10-01/-crazy-right-more-pe-funds-than-mcdonald-
s-signals-pressure.

188 How does the size of private markets compare to public markets?,
HarbourVest, https://www.harbourvest.com/insights-news/insights/cpm-how-does-
the-size-of-private-markets-compare-to-public-markets/.

189 Compl. ¶ 110 (quoting SC-00000823 at 824).

190 Id. ¶ 192 (quoting SC-00006113 at 113–14).

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that to win your deal.”191 Those comments inferably reflect how Hamilton thought

about his role on the Committee and his ability to use it to benefit Summit. It is also

pertinent that one of Vista’s representatives thought Summit would have a conflict

for purposes of a Vista-related transaction.192 Although not dispositive, the comment

reflects an insider’s assessment of the relationship.

At the pleading stage, the court cannot ignore what these allegations suggest

about Hamilton’s independence. At a later stage of the case, Hamilton and Summit

may explain them adequately. At the pleading stage, it is reasonably conceivable that

the Proxy Statement omitted material information and created a partial disclosure

problem by portraying Hamilton as independent and stating only that Summit and

General Atlantic “invested in the same portfolio companies.”193

f. Information Regarding Post-Transaction Plans

Finally, the plaintiffs allege that the Proxy Statement failed to disclose that

Vista shared a value creation plan with Company management that involved making

operational changes and then selling the Company’s principal business. That type of

detail might be interesting, and it can be relevant to litigation, but it was not material

to stockholders when voting on a cash deal.

191 Id. (quoting SC-00006113 at 113–14).

192 Id. ¶ 71.

193 Ex. D at 29.

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3. Entire Fairness Applies.

The disclosure violations prevent the MFW governance interventions from

lowering the standard of review to an irrebuttable version of the business judgment

rule. The Recapitalization is inferably governed by the entire fairness standard of

review, and the defendants accept that the claims for breach of fiduciary duty can

move forward under that standard.

B. Exculpation

Rodriguez, Dunnam, Hamilton, and Bennett seek dismissal on the basis of

exculpation. Rodriguez’s motion succeeds. Dunnam, Hamilton, and Bennett may

succeed at a later stage, but for now, the Complaint sufficiently pleads non-

exculpated claims against them.

Section 102(b)(7) of the Delaware General Corporation Law authorizes a

certificate of incorporation that shields directors from monetary liability for a breach

of the duty of care.194 The Company’s certificate of incorporation contains an

exculpation provision.195

Since 2015, “[a] plaintiff seeking only monetary damages must plead non-

exculpated claims against a director who is protected by an exculpatory charter

provision to survive a motion to dismiss, regardless of the underlying standard of

194 1 David A. Drexler et al., Delaware Corporation Law and Practice § 6.02[7],

at 6-18 (2022); accord Presidio, 251 A.3d at 253 & n.5.

195 Ex. A, art. VI, § 1(a).

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review for the board’s conduct—be it Revlon, Unocal, the entire fairness standard, or

the business judgment rule.”196 To plead a non-exculpated claim, a complaint must

allege “facts supporting a rational inference” that the director (1) “harbored self-

interest adverse to the stockholders’ interests,” (2) “acted to advance the self-interest

of an interested party from whom they could not be presumed to act independently,”

or (3) “acted in bad faith.”197

“[E]ach director has a right to be considered individually,” and “the mere fact

that a director serves on the board of a corporation with a controlling stockholder

does not automatically make that director not independent.”198 “So applied, the

existence of an exculpatory provision operates more in the nature of an immunity,

comparable to the extent to which sovereign immunity typically protects government

employees from suit, rather than as an affirmative defense.”199

1. Rodriguez

The Complaint fails to plead a non-exculpated claim against Rodriguez.

Because he is a facially independent and disinterested director, the Complaint must

196 Cornerstone, 115 A.3d at 1175–76 (footnotes omitted).

197 Id. at 1179–80.

198 Id. at 1182–83.

199 In re EZCORP Inc. Consulting Agreement Deriv. Litig., 130 A.3d 934, 940

(Del. Ch. 2016).

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allege facts supporting an inference that he nevertheless acted disloyally or in bad

faith.200 It falls short.

The duty of loyalty requires that disinterested, independent directors act in

good faith.201 A director fails to act in good faith when “the fiduciary intentionally

acts with a purpose other than that of advancing the best interests of the

corporation.”202 A plaintiff can call into question a director’s good faith by pleading

facts supporting an inference that the director acted for some other purpose. 203 “Bad

faith can be the result of “any human emotion [that] may cause a director to

[intentionally] place his own interests, preferences or appetites before the welfare of

the corporation,” including greed, “hatred, lust, envy, revenge, . . . shame or pride.”204

200 Cornerstone, 115 A.3d at 1179–80.

201 In re Chelsea Therapeutics Int’l Ltd. S’holders Litig., 2016 WL 3044721, at

*1 (Del. Ch. May 20, 2016).

202 In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 67 (Del. 2006).

203 Id. at 53 (noting that Delaware law “clearly permits a judicial assessment

of director good faith” at the pleading stage); accord eBay Domestic Hldgs., Inc. v.
Newmark, 16 A.3d 1, 40 (Del. Ch. 2010).

204 In re RJR Nabisco, Inc. S’holders Litig., 1989 WL 7036, at *15 (Del. Ch. Jan.

31, 1989) (Allen, C.); see Guttman v. Huang, 823 A.2d 492, 506 n.34 (Del. Ch. 2003)
(“The reason for the disloyalty (the faithlessness) is irrelevant, the underlying motive
(be it venal, familial, collegial, or nihilistic) for conscious action not in the
corporation’s best interest does not make it faithful, as opposed to faithless.”).

73
A director can also act in bad faith by engaging in an “intentional dereliction of duty”

such as by showing a “conscious disregard for one’s responsibilities.”205

The standard for bad faith is not whether the action taken is “so beyond the

bounds of reasonable judgment that it seems essentially inexplicable on any other

ground.”206 The Delaware Supreme Court rejected that standard in Kahn v. Stern,

where the justices considered an appeal from a decision that declined to draw a

pleading-stage inference that directors had acted in bad faith.207 While agreeing with

the result, Chief Justice Strine went out of his way to state that

to the extent that the Court of Chancery’s decision might be read as
suggesting that a plaintiff in this context must plead facts that rule out
any possibility other than bad faith, rather than just pleading facts that
support a rational inference of bad faith, we disagree with that
statement.208

In support, he cited Brinckerhoff, a 2017 decision in which the Delaware Supreme

Court overruled an earlier precedent in which the justices had used the standard of

“so far beyond the bounds of reasonable judgment that it seems essentially

205 Disney, 906 A.2d at 66; accord Lyondell Chem. Co. v. Ryan, 970 A.2d 235,

240 (Del. 2009).

206 Leung v. Schuler, 2000 WL 1478538, at *6 (Del. Ch. Oct. 2, 2000), aff’d, 783

A.2d 124 (Del. 2001) (TABLE), abrogated by Brinckerhoff v. Enbridge Energy Co.,
Inc., 159 A.3d 242, 258–60 (Del. 2017), and Kahn v. Stern, 183 A.3d 715, 715 (Del.
2018) (TABLE).

207 Kahn, 183 A.3d at 715.

208 Id.

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inexplicable on any ground other than bad faith.”209 The Brinckerhoff decision held

that to plead action not in good faith, a plaintiff need only plead facts supporting an

inference that the defendant did not reasonably believe that the transaction was in

the best interests of the entity or its equity holders.210

To be sure, showing that conduct is “inexplicable on any ground than bad faith”

remains one means of establishing bad faith, but a plaintiff is not required to plead

facts meeting that standard to survive a motion to dismiss. A plaintiff need not “plead

facts that rule out any possibility other than bad faith.”211 At trial, a plaintiff need

not rule out other explanations; the plaintiff need only show by a preponderance of

the evidence that the fiduciary acted for a purpose other than the best interest of the

corporation.212 Likewise, at the pleading stage, a plaintiff need only plead facts

supporting a reasonably conceivable inference that the fiduciary acted for a purpose

other than the best interest of the corporation.

Under Rule 9(b), a plaintiff can plead knowledge generally.213 That means the

plaintiff must plead facts which, when viewed holistically, support a reasonable

209 Id. at 715 n.5 (citing Brinckerhoff, 159 A.3d at 258–60).

210 Brinckerhoff, 159 A.3d at 258–60.

211 Kahn, 183 A.3d at 715.

212 See Brinckerhoff, 159 A.3d at 259–60.

213 Ct. Ch. R. 9(b) (“Malice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.”).

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inference that the person could have acted with the requisite mental state. “Even

after a trial, a judge may need to make credibility determinations about a defendant’s

subjective beliefs by weighing witness testimony against objective facts.”214 And even

then, the members of the Court of Chancery “cannot peer into the hearts and souls of

directors to determine their subjective intent with certainty.”215 “Without the ability

to read minds, a trial judge only can infer a party’s subjective intent from external

indications.”216 “Objective facts remain logically and legally relevant to the extent

they permit an inference that a defendant lacked the necessary subjective belief.”217

“Although lawyers routinely object that witnesses cannot speculate about

someone else’s state of mind, there is actually nothing special about it.”218

While “mind reading” might sound like a mentalist magic trick, for
cognitive scientists it refers to the very pedestrian capacity we all have
for figuring out what another human being is thinking. . . . Other
people’s minds are opaque to us, so we cannot observe them directly.
And yet, when someone walks toward the water fountain on a hot day,
we know she wants a drink. When someone yelps after stubbing her toe,
we know she feels pain. When someone aims an arrow at a target, we

214 Allen v. Encore Energy P’rs, L.P., 72 A.3d 93, 106 (Del. 2013).

215 Id. (internal quotation marks omitted).

216 Allen v. El Paso Pipeline GP Co., L.L.C., 113 A.3d 167, 178 (Del. Ch. 2014),

aff’d, 2015 WL 803053 (Del. Feb. 26, 2015) (TABLE).

217 Id.

218 Firefighters’ Pension Sys. of City of Kansas City v. Found. Bldg. Materials,

Inc., 318 A.3d 1105, 1164 (Del. Ch. 2024).

76
know she intends to hit it. We take in observable data about a person
and infer something about her unobservable mental life.219

“To get at a person’s unobservable mental state, we look at what the person did and

the circumstances in which they did it.”220

Allegations of bad faith do not require a smoking gun. As Chancellor Allen

explained:

Rarely will direct evidence of bad faith—admissions or evidence of
conspiracy—be available. Moreover, due regard for the protective nature
of the stockholders’ class action, requires the court, in these cases, to be
suspicious, to exercise such powers as it may possess to look
imaginatively beneath the surface of events, which, in most instances,
will itself be well-crafted and unobjectionable.221

Chancellor Allen made those observations when ruling on a preliminary injunction

application, after the plaintiff had the opportunity to conduct discovery and take

depositions. At the pleading stage, his admonition carries even greater weight.

Here, however, the plaintiffs have not pled enough. They allege that Rodriguez

acted in bad faith because he repeatedly deferred to General Atlantic and Goldman,

did not heed Evercore’s advice, and failed alongside his fellow Committee member to

be assertive enough or negotiate meaningfully.

219 Mihailis E. Diamantis, How to Read a Corporation’s Mind, in The Culpable

Corporate Mind 222–23 (Elise Bant ed., 2023).

220 Found. Bldg., 318 A.3d at 1164.

221 In re Fort Howard Corp. S’holders Litig., 1988 WL 83147, at *12 (Del. Ch.

Aug. 8, 1988).

77
For Rodriguez, these allegations could at most support an exculpated breach

of the duty of care. The Complaint tries to introduce a soupçon of disloyalty by

observing that Goldman recommended Rodriguez to the Board, Stamas and Osnoss

previously worked at Goldman, and Rodriguez served on Harvard Business School’s

Global Advisory Board when Stamas and Osnoss studied there. Those allegations are

sufficiently weak that they underscore the absence of any meaningful reason to

question Rodriguez’s independence.

Rodriguez is therefore dismissed. The dismissal is necessarily interlocutory. If

discovery shows that Rodriguez had a more significant and compromising role, then

subject to the law of the case doctrine, the plaintiffs could seek to revisit the dismissal,

if good cause exists for doing so.222

2. Dunnam

Dunnam is also a facially disinterested and independent director. But her

situation differs from Rodriguez’s in two respects. First, General Atlantic

recommended her to the Board, but took pains not to designate her as a General

Atlantic director—even though she was replacing a General Atlantic designee.

Second, the Board initially appointed Dunnam as a member of the Committee, but

222 See Zirn v. VLI Corp., 1994 WL 548938, at *2 (Del. Ch. Sep. 23, 1994) (“Once

a matter has been addressed in a procedurally appropriate way by a court, it is
generally held to be the law of that case and will not be disturbed by that court unless
compelling reason to do so appears.”).

78
she resigned because General Atlantic had introduced her to a professional

opportunity.

The plaintiffs seek an inference that because General Atlantic recommended

Dunnam as a director and advanced her career, she inferably approved the

Recapitalization as part of a quid pro quo. A director’s nomination to a board,

standing alone, is not enough to call into question the director’s independence from

the nominating party.223 Here, the non-designation is a bit fishy, but still not enough.

But the professional opportunity points to something more. In work that

focuses on relationships with controlling stockholders, Professor Da Lin has explored

223 E.g., Aronson v. Lewis, 473 A.2d 805, 816 (Del. 1984) (subsequent history

omitted) (“[I]t is not enough to charge that a director was nominated by or elected at
the behest of those controlling the outcome of a corporate election. That is the usual
way a person becomes a corporate director. It is the care, attention and sense of
individual responsibility to the performance of one’s duties, not the method of
election, that generally touches on independence.”); Goldstein, 2022 WL 1671006, at
*2 (“Although a director’s nomination to a board standing alone is not enough to call
into question the director’s independence from the nominating party, a pattern of
facts surrounding the director’s service can do the trick.”); In re Viacom Inc. S’holders
Litig., 2020 WL 7711128, at *21 n.238 (Del. Ch. Dec. 29, 2020) (“The Viacom
Committee Defendants contend the mere fact a director was appointed to the board
by an interested stockholder does not alone compromise that director’s independence.
. . . I agree.”); In re KKR Fin. Hldgs. LLC S’holder Litig., 101 A.3d 980, 996 (Del. Ch.
2014) (“It is well-settled Delaware law that a director’s independence is not
compromised simply by virtue of being nominated to a board by an interested
stockholder.”), aff’d sub nom. Corwin v. KKR Fin. Hldgs. LLC, 125 A.3d 304 (Del.
2015); S. Muoio & Co. LLC v. Hallmark Ent. Invs. Co., 2011 WL 863007, at *10 (Del.
Ch. Mar. 9, 2011) (“The mere nomination of a director by a majority stockholder,
however, is insufficient to demonstrate lack of independence.”), aff’d, 35 A.3d 419
(Del. 2011).

79
the ability of directors to be influenced by the prospect of reward.224 By examining

the professional connections between directors and controllers, she finds that some

controllers regularly reappoint cooperative independent directors to executive and

board positions at other firms.225 She also explores how different types of controllers

have differing abilities to reward directors. She finds that controllers with wider

bases of investments are much more likely to have repeat relationships with the

nominally independent directors who serve on their boards.226 She recommends that

courts take a more nuanced approach to independence that accounts for the ability of

some controllers who are repeat players to reward nominally independent

directors.227

The same insights apply to investment funds that can appoint individuals to

multiple boards over time.228 Lin observes that venture capital and private equity

firms are repeat players with substantial opportunities to reward directors.229 Other

224 Da Lin, Beyond Beholden, 44 J. Corp. L. 515, 517–18 (2019) (presenting

empirical research showing directors’ behavior is sensitive to both fear of losing board
seats and reward of obtaining additional board seats).

225 Id.

226 Id. at 543–46.

227 Id. at 543–46, 549–50.

228 Id. at 544–46.

229 Id. See Jesse M. Fried & Mira Ganor, Agency Costs of Venture Capitalist

Control in Startups, 81 N.Y.U. L. Rev. 967, 989 n.63 (2006) (noting that
“conversations with local VCs confirm” that “independent directors” have incentives
to side with VCs); D. Gordon Smith, The Exit Structure of Venture Capital, 53 UCLA
80
research has found similar repeat-player effects for bankruptcy directors.230 Scholars

identified a phenomenon in which independent directors join a board around the time

that the company files for Chapter 11. The new directors are held out as independent

and empowered to make key decisions regarding the bankruptcy. The scholars note,

however, that the new directors

suffer from a structural bias resulting from being part of a closely-knit
community: a handful of private equity sponsors that control distressed
companies routinely turn to a handful of law firms for representation
and—per their advice—pick these bankruptcy directors from a small
pool.231

The scholars argue that the dynamics of a small network of repeat players and the

prospect of future engagements are sufficient to call into question the directors’

independence.

At present, the Complaint contains scant information about the nature of the

professional opportunity. Yet the opportunity was sufficient to cause Dunnam to

withdraw from the Committee. It may be that Dunnam was being careful and that

the opportunity would not foreclose exculpation. Depending on the facts, it may be

L. Rev. 315, 320 (2005) (“[I]n the event of conflict between the venture capitalist and
the entrepreneur, such outside directors may have a natural inclination to side with
the venture capitalist.”); William W. Bratton, Venture Capital on the Downside:
Preferred Stock and Corporate Control, 100 Mich. L. Rev. 891, 921 (2002) (arguing
outside directors are “highly susceptible to the influence of the VC”).

230 Jared A. Ellias, Ehud Kamar & Kobi Kastiel, The Rise of Bankruptcy
Directors, 95 S. Cal. L. Rev. 1083, 1086–90 (2022).

231 Id. at 1136.

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possible to address the issue after limited discovery through a motion for summary

judgment. That determination, however, cannot be made at the pleading stage.

Dunnam is not presently entitled to exculpation.

3. Hamilton

Hamilton is not entitled to exculpation at the pleading stage. As both a director

of the Company and a managing director of Summit, he faced the dual-fiduciary

problem identified in Weinberger, in which the Delaware Supreme Court held that

“[t]here is no dilution of [fiduciary] obligation” when a director holds “dual or

multiple” fiduciary positions and “no ‘safe harbor’ for such divided loyalties in

Delaware.”232 “If the interests of the beneficiaries to whom the dual fiduciary owes

duties are aligned, then there is no conflict. But if the interests of the beneficiaries

diverge, the fiduciary faces an inherent conflict of interest.”233

This decision has drawn a pleading-stage inference that Summit had

compromising ties to General Atlantic and Vista because of the firms’ history of

overlapping and mutually beneficial transactions. This decision has also noted that

when selecting a banker, Hamilton told a colleague that he was “trying to curry favor

with some places that tend to show [Summit] more deal flow,”234 and after the

232 See Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983).

233 In re Trados Inc. S’holder Litig. (Trados II), 73 A.3d 17, 46–47 (Del. Ch.

2013) (citation omitted); accord Chen, 87 A.3d at 670.

234 Compl. ¶ 110 (quoting SC-00000823 at 824).

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transaction was approved, told a colleague to use the Evercore engagement “to win

your deal.”235 Those comments show how Hamilton thought about his ability to use

his role on the Committee to benefit Summit. Plus, a Vista representative thought

Summit would have a conflict for purposes of a Vista-related transaction.236

Those allegations support an inference that Summit’s interests diverged from

those of the minority stockholders, creating a conflict of interest for Hamilton as a

dual fiduciary. The Complaint’s allegations support an inference that Hamilton hired

Evercore to generate benefits for Summit. Hamilton also favored General Atlantic’s

interests during the sale process by rejecting Evercore’s advice and approving the bid

process letter that General Atlantic wanted. At the pleading stage, he is not entitled

to exculpation.

4. Bennett

Bennett is not entitled to exculpation. Bennett was not only a director but also

the Company’s CEO. Through a change-of-control agreement, Bennett received

lucrative retirement benefits as a result of the Recapitalization.

Bennett was not independent of General Atlantic. A fiduciary is not

independent when “the fiduciary is ‘sufficiently loyal to, beholden to, or otherwise

influenced by an interested party’ to undermine the fiduciary’s ability to judge the

235 Id. ¶ 192 (quoting SC-00006113 at 113–14).

236 Id. ¶ 71.

83
matter on its merits.”237 Bennett was a corporate officer in a controlled company.

“Under the great weight of Delaware precedent, senior corporate officers generally

lack independence for purposes of evaluating matters that implicate the interests of

either a controller or a conflicted board majority.”238

Bennett was also interested in the Recapitalization. “A director is considered

interested where he or she will receive a personal financial benefit from a transaction

that is not equally shared by the stockholders.”239 Through his change-in-control

arrangements, Bennett stood to reap approximately $11 million through change-of-

control payments and cashing out of otherwise illiquid restricted stock and unvested

equity incentive plan awards.240 Those benefits rendered Bennett interested in the

Recapitalization.241

In two decisions, this court has suggested that change-in-control benefits

cannot not create a conflict of interest as a matter of law when those benefits (i) are

237 In re Straight Path Commc’ns Inc. Consol. S’holder Litig., at *15 (Del. Ch.

Feb. 17, 2022) (quoting In re Pattern Energy Gp. Inc. S’holders Litig., 2021 WL
1812674, at *66 (Del. Ch. May 6, 2021)).

238 New Enter. Assocs. 14, L.P. v. Rich (NEA), 292 A.3d 112, 161 & n.34 (Del.

Ch. 2023) (collecting cases).

239 Rales v. Blasband, 634 A.2d 927, 936 (Del. 1993), overruled in part on other

grounds by United Food & Com. Workers Union & Participating Food Indus. Emps.
Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034 (Del. 2021).

240 Compl. ¶ 228.

241 See Goldstein, 2022 WL 1671006, at *42–43 (collecting cases finding
severance payments created an interest under Cornerstone).

84
paid out pursuant to a pre-existing agreement, and (ii) there is no allegation that

those benefits were triggered by the specific bidder or specific transaction. 242 Both

decisions relied on cases that did not assert that proposition as a matter of law, but

rather determined on the facts presented, either when denying a motion for

preliminary injunction or when granting a motion for summary judgment, that a

specific change-in-control payment did not give rise to a disabling interest for a

specific defendant.243

242 Morrison v. Berry, 2019 WL 7369431, at *22 (Del. Ch. Dec. 31, 2019)
(holding that complaint failed to support a reasonable inference that general counsel’s
change-in-control benefits created a conflict because “[g]enerally, change-in-control
benefits arising out of a pre-existing employment contract do not create a conflict,
and nothing in the alleged facts suggests [the general counsel]’s single-trigger bonus
was unique or specially negotiated in anticipation of the Apollo transaction” (footnote
omitted)); In re Novell, Inc. S’holder Litig., 2013 WL 322560, at *11 (Del. Ch. Jan. 3,
2013) (“[T]he possibility of receiving change-in-control benefits pursuant to pre-
existing employment agreements does not create a disqualifying interest as a matter
of law.”).

243 See In re Smurfit–Stone Container Corp. S’holder Litig., 2011 WL 2028076,

at *22 (Del. Ch. May 24, 2011) (declining to enjoin merger; noting that plaintiffs
argued that certain members of target management, who acted as negotiators, would
receive change-in-control bonuses; and finding that plaintiffs “have not shown that
the executives involved acted on their conflicts at Smurfit–Stone’s expense or that
the Committee impermissibly permitted them to do so”); In re W. Nat’l Corp. S’holders
Litig., 2000 WL 710192, at *12 (Del. Ch. May 22, 2000) (granting summary judgment
in favor of defendants and holding CEO’s accelerated vesting of stock options and a
$4.5 million cash severance payment did not create an economic conflict of interest
for the CEO, who would retire in connection with the merger, where (i) “the severance
payment and the accelerated vesting schedule [were] legitimate contractual benefits
emanating from a 1994 employment agreement,” (ii) “they were the subject of arm’s
length bargaining and mutual consideration,” and (iii) at the time of the merger, the
CEO “owned equity in both companies, [and] his interest in [the sell-side entity]
significantly outweighed his interest in [the buyer]”); Nebenzahl v. Miller, 1993 WL
488284, at *3 (Del. Ch. Nov. 8, 1993) (declining to grant preliminary injunction and
finding no reasonable probability that a breach of duty of loyalty occurred where the
85
The two cases go a step too far by converting fact-specific holdings into a rule

of law. A fiduciary is interested in a transaction when the fiduciary receives

something different than stockholders as a whole and when that something is

material to the fiduciary.244 The fact that the individual receives the payment or other

differential interest because of an existing agreement does not change the fact that

the individual receives the payment or other differential interest. If a fiduciary is

choosing between two deals, one that will cause the fiduciary to receive $11 million

personally and the other that will not, the fiduciary has an interest in the first deal.

That interest exists regardless of whether the $11 million is provided as part of the

deal or under a pre-existing contract.

It is possible to imagine scenarios where a defendant might contend

successfully on the facts of a given case that a change-in-control benefit did not give

rise to a conflict for purposes of a particular decision. If a defendant faced a choice

between two deals, both of which would cause the defendant to receive the same

benefit, then as to the decision between those two deals, the defendant would not have

a conflict. But as to other alternatives that would not trigger the payment, the

fiduciary has a conflict.

merger agreement guaranteed change-in-control benefits under pre-existing
employment agreements to four inside directors on an eight-member board).

244 See, e.g., Rales, 634 A.2d at 936; Frederick Hsu Living Tr. v. ODN Hldg.

Corp., 2017 WL 1437308, at *30 (Del. Ch. Apr. 14, 2017); Trados I, 2009 WL 2225958,
at *6.

86
It is also true that on the facts of a given case, the evidence may show that a

change-in-control payment did not give rise to a conflict or that the fiduciary in

question did not succumb to it. It does not follow that the receipt of a pre-existing

contractual benefit, solely by virtue of being a pre-existing contractual benefit, cannot

create a conflict as a matter of law. The change-in-control benefits that Bennett

received constituted a benefit not shared with the Company’s other stockholders and

were sufficiently large to be material. They constituted a compromising interest.

Finally, it is reasonably conceivable that Bennett acted to advance his own

interests by tipping Vista about the sale process without telling the Board or the

Committee. As a director, Bennett “had an unremitting obligation to deal candidly

with [his] fellow directors.”245 “To satisfy his duty of loyalty, and its subsidiary

requirement that he act in good faith, he needed to be candid with . . . his fellow board

245 HMG/Courtland Props., Inc. v. Gray, 749 A.2d 94, 119 (Del. Ch. 1999)

(internal quotation marks omitted); see Mills Acquisition Co. v. Macmillan, Inc., 559
A.2d 1261, 1283 (Del. 1989) (“As the duty of candor is one of the elementary principles
of fair dealing, Delaware law imposes this unremitting obligation not only on officers
and directors, but also upon those who are privy to material information obtained in
the course of representing corporate interests.”); Thorpe v. CERBCO, 676 A.2d 436,
441–42 (Del. 1996) (stressing the importance of duty to be candid with fellow
directors); Int’l Equity Cap. Growth Fund, L.P. v. Clegg, 1997 WL 208955, at *7 (Del.
Ch. Apr. 22, 1997) (noting that directors owe a “duty to disclose to other directors”);
Am. L. Inst., Principles of Corporate Governance: Analysis and Recommendations §
5.02(a)(1) cmt. (1994), Westlaw (database updated Oct. 2024) (“A director or senior
executive owes a duty to the corporation not only to avoid misleading it by
misstatements or omissions, but affirmatively to disclose the material facts known to
the director or senior executive.”).

87
members.”246 Bennett inferably brought Vista into the process because Vista was

likely to make a control bid that would trigger Bennett’s change-of-control benefits.

By failing to disclose his actions to the Board or the Committee, Bennett inferably

acted in bad faith.

Viewed as a whole, the pleading-stage record supports an inference that

Bennett could have acted disloyally or in bad faith by catering to the wishes of

General Atlantic. He is not entitled to dismissal at this stage of the case.

C. The Claims For Aiding And Abetting

Vista and Goldman contend that the Complaint fails to plead a claim against

them for aiding and abetting. The Complaint states an aiding and abetting claim

against Goldman, but not against Vista.

A claim for aiding and abetting has four elements: (1) the existence of a

fiduciary relationship, (2) a breach of fiduciary duty, (3) knowing participation in that

breach, and (4) damages proximately caused by the breach.247 “[A] claim for aiding

and abetting often turns on meeting the ‘knowing participation’ element.”248 The

246 Crescent/Mach I P’ship, L.P. v. Turner, 2007 WL 1342263, at *3 (Del. Ch.

May 2, 2007). See generally J. Travis Laster & John Mark Zeberkiewicz, The Rights
and Duties of Blockholder Directors, 70 Bus. Law. 33, 45 (2015) (explaining that a
director’s failure “to provide information regarding the corporation to the board . . .
may constitute a breach of fiduciary duty on the part of the . . . director[ ] responsible
for the failure”).

247 Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001).

248 Buttonwood Tree Value P’rs, L.P. v. R. L. Polk & Co., Inc., 2017 WL 3172722,

at *9 (Del. Ch. July 24, 2017).

88
“knowing participation” element “involves two concepts: knowledge and

participation.”249

The knowledge concept itself has two dimensions.250 First, the secondary actor

must know that the primary wrongdoer’s conduct constituted a breach.251 Second, the

secondary actor must know that its own participation in the wrongful conduct was

legally improper.252 The secondary actor’s conduct need not be wrongful or tortious in

its own right, but the secondary actor must know that it was acting wrongfully by

participating.253

“Because the involvement of secondary actors in tortious conduct can take a

variety of forms that can differ vastly in their magnitude, effect, and consequential

culpability,” the participation concept “requires that the secondary actor have

249 Presidio, 251 A.3d at 275.

250 RBC Cap. Mkts., 129 A.3d at 861–62.

251 Id.; accord Malpiede, 780 A.2d at 1097 (“Knowing participation in a board’s

fiduciary breach requires that the third party act with the knowledge that the conduct
advocated or assisted constitutes such a breach.”).

252 RBC Cap. Mkts., 129 A.3d at 862.

253 NEA, 292 A.3d at 176 (“The aider and abettor must knowingly assist
another in committing a wrongful act. The means by which an aider and abettor
provides assistance need not be independently wrongful.”); e.g., Found. Bldg.
Materials, 318 A.3d at 1171 (“The plaintiff has not pled that RBC took action that
was independently wrongful, but that is not required. . . . RBC worked closely with
the Lone Star-affiliated directors to secure proposals that included a maximum Early
Termination Payment. RBC played an integral part in the effort to sell the Company
through a transaction that would trigger the Early Termination Payment. The
complaint states a claim against RBC for aiding and abetting that alleged breach.”).

89
provided ‘substantial assistance’ to the primary violator.”254 To assess substantial

assistance, Delaware law applies a five-factor test derived from Section 876 of the

Restatement (Second) of Torts. That framework calls for considering (1) the nature of

the act encouraged, (2) the amount of assistance given by the defendant, (3) his

presence or absence at the time of the tort, (4) his relation to the other, and (5) his

state of mind.255

In two recent decisions, the Delaware Supreme Court made the knowing

participation element tougher, both for knowledge and participation. Under RBC

Capital, constructive knowledge was enough to satisfy the knowledge requirement.256

That meant the secondary actor had to act “knowingly, intentionally, or with reckless

indifference.”257 In Columbia Pipeline, the justices overruled that aspect of RBC

Capital by holding that the aider and abettor’s knowledge “must be actual

knowledge.”258

254 In re Dole Food Co., Inc. S’holder Litig., 2015 WL 5052214, at *41 (Del. Ch.

Aug. 27, 2015).

255 Id. at *42; accord In re Mindbody, Inc., S’holder Litig., 332 A.3d 349, 395–

96 (Del. 2024).

256 RBC Cap. Mkts., 129 A.3d at 862 (“To establish scienter, the plaintiff must

demonstrate that the aider and abettor had actual or constructive knowledge that
their conduct was legally improper.” (internal quotation marks omitted)).

257 Id. (internal quotation marks omitted).

258 In re Columbia Pipeline Gp., Inc. Merger Litig., 342 A.3d 324, 368 (Del.

2025).

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In Mindbody and Columbia Pipeline, the justices tightened the participation

concept, this time by narrowing what can qualify as “substantial assistance.” For

purposes of the second Restatement factor, the justices held that a conscious failure

to act in the face of a known duty to act did not qualify as substantial assistance,

reasoning that it constituted mere passive inaction rather than affirmative conduct.

Mindbody involved an acquirer who agreed in a merger agreement to supply

accurate information for inclusion in the target corporation’s proxy statement and to

correct any material misstatements or omissions the acquirer identified.259 When

addressing the second Restatement factor—the amount of assistance given by the

defendant—the justices viewed the record differently than the trial court. According

to the Delaware Supreme Court, the acquirer’s decision to remain silent in the face

of its contractual duty, despite knowing of material misstatements and omissions in

the proxy statement, merely constituted “passive awareness” of the disclosure

259 See Mindbody, 332 A.3d at 375 (describing contractual obligations); id. at

380 (“According to the trial court, Vista aided and abetted Stollmeyer’s disclosure
breach by failing to correct the Proxy [Statement] Materials to include a full and fair
description of its own interactions with Stollmeyer. In reaching this conclusion, the
trial court relied on Vista’s contractual obligation to review the Proxy [Statement]
Materials and notify Mindbody if there were any material omissions. The trial court
found that Vista personnel reviewed the Proxy [Statement] Materials, knew about
Vista’s interactions that were omitted and the significance of those omissions, and
failed to speak up.”); id. at 389 (“The trial court held that Vista’s ‘contractual
obligation’ in the merger agreement to review Mindbody’s proxy statements and
‘correct’ any misstatements or omissions, and Vista’s subsequent failure to correct
omissions, amounted to ‘knowing participation’ in Stollmeyer’s breach of his duty of
disclosure.”).

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violation rather than active participation in its commission.260 The justices also

weighed the evidence differently when assessing the acquirer’s state of mind. Despite

agreeing with the trial court that the evidence showed the acquirer “had at least some

awareness that its own actions during the sale process were not above suspicion,” the

senior tribunal found that the evidence “does not adequately support a finding

of scienter and aiding and abetting liability for the proxy disclosure violations.”261 The

Delaware Supreme Court also relied heavily on the arms’ length nature of the

relationship between an acquirer and the target.262

260 Id. at 390 (“We hold that the Merger Agreement’s contractual provision did

not transform Vista’s inaction into a ‘knowing participation’ in Stollmeyer’s
disclosure breach.”); see id. at 393–94.

261 Id. at 405; see id. at 406 (“The trial court may well be correct that Vista hid

such details because they did not reflect well on Vista. Vista may have been aware
that some of its conduct during the sale process was not above suspicion. But the
knowledge that matters for the second prong of scienter is knowledge that the aider
and abbettor’s (Vista’s) own conduct wrongfully assisted the primary violator
(Stollmeyer) in his disclosure breach, not his sale-process Revlon breach. The trial
court made no finding that indicated that Vista knew that its failure to abide by its
contractual duty to notify Mindbody of potential material omissions in the Proxy
[Statement] Materials was wrongful and that its failure to act could subject it to
liability to Mindbody’s stockholders.”).

262 Id. at 404. As part of its analysis, the Delaware Supreme Court stated:

“Finally, there are also compelling public policy reasons not to read contractual
disclosure-based obligations between a third-party buyer and a target company as
implying independent fiduciary duties between the third-party buyer and the target’s
stockholders. Such a duty would collapse the arms’-length distance between the third-
party buyer and the target, forcing the buyer to consider its duty to the target’s
stockholders instead of to its own stockholders.” Id. Yet as the high court recognized
in the preceding paragraph of its decision, no one asserted a claim for breach of
fiduciary duty against the acquirer, and no one argued that the contractual obligation
created a fiduciary obligation. Id. The only claim was for aiding and abetting. For the
trial court, the contractual obligation provided the basis for interpreting conscious
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The justices followed the same reasoning in Columbia Pipeline, where a

parallel contractual duty existed, the acquirer knew about material misstatements

and omissions, and the counterparty decided to remain silent.263 The Delaware

Supreme Court accepted that the acquirer “offered comments on the Proxy

[Statement],” but stressed that the acquirer “did not propose any of the statements

that the Court of Chancery found to be misleading” and did not “suggest omitting

material information.”264 The justices also reasoned that the sell-side fiduciaries

knew everything the acquirer knew “with one exception.”265 The exception did not

carry the day, because on that factual point the justices made a different finding than

the trial court.266

In holding that a conscious failure to comply with a known duty to act did not

constitute meaningful assistance, the justices made two moves. First, they reasoned

that a conscious failure to act could only be significant if the duty to act ran to the

injured party, rather than to the primary wrongdoer. According to the Delaware

inaction as substantial participation. No more than that. See Mindbody, 2023 WL
2518149, at *44 (“Vista had an obligation to correct the material omissions discussed
above and failed to do so. Vista thus withheld information from the stockholders.”).

263 Columbia Pipeline, 342 A.3d at 368.

264 Id. at 371.

265 Id.

266 Id.

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Supreme Court, “without a third party’s independent duty to a plaintiff, there can be

no liability for a failure to act.”267 But if the alleged aider and abettor already owes a

duty to the plaintiff, and the aider and abettor failed to act in the face of it, then the

aider and abettor becomes a primary wrongdoer, and the aiding and abetting claim

is superfluous. The Delaware Supreme Court supported that interpretation by citing

authorities recognizing that violating a duty to the injured party is sufficient for

knowing participation.268 Those authorities did not hold that a duty to the injured

party was necessary, nor did they rule out the possibility that failing to act in the face

of a duty to the primary wrongdoer could be sufficient.269

The justices’ other move was to treat conscious inaction as lacking an active

component. By taking that approach, Mindbody and Columbia Pipeline cut against

the legal grain. When assessing fraud, Delaware law treats silence in the face of a

duty to speak as the equivalent of an affirmative misstatement.270 When determining

267 Mindbody, 332 A.3d at 394 (citing Patton v. Simone, 1992 WL 183064, at

*9–11 (Del. Super. June 25, 1992)).

268 See id. (quoting Restatement (Second) of Torts § 876(c) (Am. L. Inst. 1979),

and citing Patton, 1992 WL 183064, at *9–11).

269 See, e.g., Metge v. Baehler, 762 F.2d 621, 624–25 (8th Cir. 1985) (“Although

courts are by no means unanimous in treating the question of substantial assistance
in a case of inaction, most seem to agree that, if the aider and abettor owes the
plaintiff an independent duty to act or to disclose, inaction can be a proper basis for
liability under the substantial assistance test.”).

270 Wildenberg v. Sign-Zone Hldgs. L.P., 2025 WL 2945823, at *2 (Del. Oct. 17,

2025) (TABLE) (“Delaware law recognizes that fraud may arise not only from
affirmative misrepresentations but also from silence in the face of a duty to speak or
from omission of material facts.”); Stephenson v. Capano Dev., Inc., 462 A.2d 1069,
94
whether a fiduciary has acted in bad faith, Delaware law regards a “conscious

disregard for one’s responsibilities” as the equivalent of bad faith conduct.271 More

generally, Delaware courts regularly treat a conscious decision not to act as the

equivalent of action.272

Moreover, by treating conscious inaction in the face of a known duty to act as

insufficient to support a finding of substantial assistance, Mindbody and Columbia

Pipeline seemingly overruled RBC Capital a second time. In the earlier decision, the

1074 (Del. 1983) (“[F]raud does not consist merely of overt misrepresentations. It may
also occur through deliberate concealment of material facts, or by silence in the face
of a duty to speak.”).

271 Disney, 906 A.2d at 66–67; accord Lyondell Chem., 970 A.2d at 240.

272 See, e.g., Aronson, 473 A.2d at 813 (“[A] conscious decision to refrain from

acting may nonetheless be a valid exercise of business judgment and enjoy the
protections of the rule.”); Quadrant Structured Prods. Co. v. Vertin, 102 A.3d 155, 183
(Del. Ch. 2014) (“The Complaint alleges that the Board had the ability to defer
interest payments on the Junior Notes, that the Junior Notes would not receive
anything in an orderly liquidation, that [Defendant] owned all of the Junior Notes,
and that the Board decided not to defer paying interest on the Junior Notes to benefit
[Defendant]. . . . A decision to act and a conscious decision not to act are . . . equally
subject to review under traditional fiduciary duty principles.”); In re China Agritech,
Inc. S’holder Deriv. Litig., 2013 WL 2181514, at *23 (Del. Ch. May 21, 2013) (“The
Special Committee decided not to take any action with respect to the Audit
Committee’s termination of two successive outside auditors and the allegations made
by Ernst & Young. The conscious decision not to take action was itself a decision.”);
Krieger v. Wesco Fin. Corp., 30 A.3d 54, 58 (Del. Ch. 2011) (“Wesco stockholders had
a choice: they could make an election and select a form of consideration, or they could
choose not to make an election and accept the default cash consideration.”); Hubbard
v. Hollywood Park Realty Enters., Inc., 1991 WL 3151, at *10 (Del. Ch. Jan. 14, 1991)
(“[T]he case-by-case development of the law governing fiduciary obligations . . . cannot
be constrained by so facile a distinction. From a semantic and even legal viewpoint,
‘inaction’ and ‘action’ may be substantive equivalents, different only in form.”).

95
Delaware Supreme Court held that a sell-side financial advisor (RBC) aided and

abetted a board of directors in breaching its duty of disclosure. 273 The case against

RBC involved two disclosure breaches, one where RBC provided false information,

the other in which RBC remained silent.

The first disclosure breach arose because RBC provided the directors with a

valuation presentation that contained a misrepresentation. In the presentation, RBC

stated that it used “Wall Street research analyst consensus projections” to derive

EBITDA.274 In fact, the “‘consensus projections’ were neither analyst projections, nor

did they represent a Wall Street consensus.”275 The directors included a summary of

the presentation in the company’s proxy statement, repeating the falsehood. For

purposes of the distinction that Mindbody and Columbia Pipeline drew between

active and passive conduct, providing false information would seem to fall on the

active side of the line.

The second disclosure violation arose because RBC failed to inform the

directors about actions it took during the sale process, including last minute efforts

to provide the buyer with staple financing. The trial court decision described the

situation as follows:

The Proxy Statement stated that RBC received the right to offer staple
financing because it “could provide a source for financing on terms that

273 See RBC Cap. Mkts., 129 A.3d at 863, 865–66.

274 Id. at 859.

275 Id.

96
might not otherwise be available to potential buyers of the Company. . .
.” JX 611 at 29. This statement was false. The Board never concluded
that RBC could provide financing that might otherwise not be available,
and no evidence to that effect was introduced at trial. In December 2010,
RBC told the Special Committee that the credit markets were open and
receptive to acquisition financing, and they remained so for the duration
of the sale process.

Equally important, this partial disclosure imposed on the Rural
directors a duty to speak completely on the subject of RBC’s financing
efforts. . . . The Proxy Statement does not describe how RBC used the
initiation of the Rural sale process to seek a role in the EMS acquisition
financing, and it does not disclose RBC’s receipt of more than $10 million
for its part in financing the acquisition of EMS. The Proxy Statement
says nothing about RBC’s lobbying of Warburg after the delivery of
Warburg’s fully financed bid, while RBC was developing its fairness
opinion. Munoz reviewed the Proxy Statement, but he did not look to see
if these matters were addressed.

A stockholder reading the Proxy Statement would conclude, incorrectly,
that RBC disclosed all of its conflicts and led a pristine process. 276

Because the directors failed to disclose information that RBC had withheld, they

breached their duty of disclosure.

At the trial level in RBC Capital, the lower court treated RBC’s knowing failure

to provide the information as sufficient to establish substantial assistance. The trial

court decision stated: “Only RBC knew the full extent of its conflicts, including its

successful plan to use the Rural sale process to gain a place on the financing trees of

the bidders for EMS and its late-stage push for a buy-side financing role from

276 In re Rural Metro Corp., 88 A.3d 54, 106 (Del. Ch. 2014) (subsequent history

omitted).

97
Warburg . . . .”277 On appeal, the Delaware Supreme Court reasoned similarly,

stating: “RBC’s failure to fully disclose its conflicts and ulterior motives to the Board,

in turn, led to a lack of disclosure in the Proxy Statement.”278 Underscoring the

conclusion that RBC’s knowing failure to supply the information was itself sufficient,

the justices concluded that “[p]ropelled by its own improper motives, RBC misled the

Rural directors into breaching their duty of care, thereby aiding and abetting the

Board’s breach of its fiduciary obligations.”279 Contrary to Mindbody and Columbia

Pipeline, RBC Capital treated the knowing failure to disclose material information

as sufficient participation, standing alone, to support the aiding and abetting

claim.280 In this section of RBC Capital, the decision did not discuss the need for a

predicate duty.

Elsewhere in the decision, however, the Delaware Supreme Court seemingly

recognized a duty running from RBC to the company, personified by its board. One of

the issues in RBC Capital involved the effect of director exculpation on aiding and

abetting liability. When discussing that issue, the trial court had explained that

277 Id. at 107.

278 RBC Cap. Mkts., 129 A.3d at 863.

279 Id.

280 Id. (“The manifest intentionality of RBC’s conduct—as evidenced by the

bankers’ own internal communications—is demonstrative of the advisor’s knowledge
of the reality that the Board was proceeding on the basis of fragmentary and
misleading information.”).

98
directors and their advisors are differently situated, describing the latter as

gatekeepers.281 After an industry uproar, the Delaware Supreme Court took pains to

distance itself from “the Court of Chancery’s description of the role of a financial

advisor in M & A transactions.”282 According to the Delaware Supreme Court, the

gatekeeper concept

does not adequately take into account the fact that the role of a financial
advisor is primarily contractual in nature, is typically negotiated
between sophisticated parties, and can vary based upon a myriad of
factors. Rational and sophisticated parties dealing at arm’s-length
shape their own contractual arrangements and it is for the board, in
managing the business and affairs of the corporation, to determine what
services, and on what terms, it will hire a financial advisor to perform
in assisting the board in carrying out its oversight function.283

Yet the justices went on to state that “[t]he banker is under an obligation not to act

in a manner that is contrary to the interests of the board of directors, thereby

undermining the very advice that it knows the directors will be relying upon in their

decision making processes.”284 RBC Capital did not identify the source of that duty,

281 Rural Metro, 88 A.3d at 88. Among other authorities, the decision relied on

Professor John Coffee’s recognition that “[o]bvious examples of gatekeepers . . . would
include . . . the investment baker providing its ‘fairness opinion’ as to the pricing of a
merger.” John C. Coffee, Jr., Gatekeeper Failure and Reform: The Challenge of
Fashioning Relevant Reforms, 84 B.U. L. Rev. 301, 309 (2004).

282 RBC Cap. Mkts., 129 A.3d at 865 n.191.

283 Id.

284 Id.

99
which might derive from agency law285 or from the implied covenant of good faith and

fair dealing inherent in every contract and hence in the banker’s engagement

letter.286

285 Restatement (Third) of Agency § 8.11 cmt. b (Am. L. Inst. 2006), Westlaw

(database updated Oct. 2024) (“An agent owes the principal a duty to provide
information to the principal that the agent knows or has reason to know the principal
would wish to have.”). It is easy to conceive of a financial advisor acting as the
corporation’s agent for purposes of its engagement. In re Shoe-Town, Inc. S’holders
Litig., 1990 WL 13475, at *7 (Del. Ch. Feb. 12, 1990) (“Shearson, in the present
situation, was hired by management to work for and answer to management. . . . In
effect, Shearson served as an agent of management. Its authority was derived by
delegation from management.”); see Andrew F. Tuch, Banker Loyalty in Mergers and
Acquisitions, 94 Tex. L. Rev. 1079, 1085–112 (2016) (arguing in favor of treating
investment bankers as fiduciaries for their clients). Authorities from other
jurisdictions suggest the existence of a fiduciary relationship, likely grounded in
agency law, between financial advisor and client. See, e.g., In re Daisy Sys. Corp., 97
F.3d 1171, 1178–79 (9th Cir. 1996) (rejecting an M&A advisor’s claim that “the
relationship between an investment banker and the banker’s [corporate] client is not
a fiduciary relationship as a matter of law,” treating that relationship as depending
on the facts and circumstances at issue, and finding that a fiduciary relationship may
have existed between the M&A advisor and its client); Am. Tissue, Inc. v. Donaldson,
Lufkin & Jenrette Sec. Corp., 351 F. Supp. 2d 79, 102 (S.D.N.Y. 2004) (stating that
the relationship between an M&A advisor and its corporate client may be fiduciary
even where no formal agency relationship exists, observing that New York courts
have found such relationships to be fiduciary, and finding that the M&A advisor in
question “owed a fiduciary duty to [its corporate client] in its capacities as investment
banker and financial advisor”); Official Comm. of Unsecured Creditors v. Donaldson,
Lufkin & Jenrette Sec. Corp., 2002 WL 362794, at *9 (S.D.N.Y. Mar. 6, 2002) (finding
sufficient facts to support the existence of a fiduciary relationship between an M&A
advisor and its corporate client); Gen. Acquisition, Inc. v. GenCorp Inc., 766 F. Supp.
1460, 1473 (S.D. Ohio 1990) (finding sufficient facts to show that an M&A advisor
was an agent of its corporate client with respect to a proposed acquisition and to
support the imposition of a de facto fiduciary duty on the M&A advisor for the benefit
of that client); Frydman & Co. v. Credit Suisse First Bos. Corp., 708 N.Y.S.2d 77, 79
(App. Div. 2000) (reversing dismissal of breach of fiduciary duty claim by a corporate
client against its M&A advisor). Financial advisors, of course, disclaim agency status
and strive to establish their status as independent contractors, but that baseline issue
is not contractible. Restatement (Third) of Agency, supra, § 1.02 (“An agency
relationship arises only when the elements stated in § 1.01 are present. Whether a
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The existence of an “obligation not to act in a manner that is contrary to the

interests of the board of directors, thereby undermining the very advice that it knows

the directors will be relying upon in their decision making processes” 287 could

encompass a duty to provide material information. That would make the facts of RBC

Capital parallel the facts of Mindbody and Columbia Pipeline, because the financial

advisor’s duty to supply information would look a lot like the contractual obligation

to identify materially misleading disclosures or omissions that Mindbody and

relationship is characterized as agency in an agreement between parties . . . is not
controlling.”). A principal can authorize an agent to engage in specific types of conduct
that otherwise might breach the agent’s duties, but the parties cannot determine by
contract whether or not the fiduciary relationship exists. See id. § 8.06(1)(b); see
Andrew F. Tuch, Disclaiming Loyalty: M&A Advisors and Their Engagement Letters:
In response to William W. Bratton & Michael L. Wachter, Bankers and Chancellors,
93 Tex. L. Rev. 211, 217 (2015); see also, e.g., Ha-Lo Indus., Inc. v. Credit Suisse First
Bos., Corp., 2005 WL 2592495, at *5–6 (N.D. Ill. Oct. 12, 2005) (denying a motion for
summary judgment that argued that a clause in an engagement letter disclaiming a
fiduciary duty between a bank and its M&A client prevented the bank from owing
fiduciary duties to its client).

286 See Baldwin v. New Wood Res. LLC, 283 A.3d 1099, 1116–24 (Del. 2022). In

Baldwin, the Delaware Supreme Court treated the concept of bad faith under the
implied covenant as synonymous with bad intent. As support, Baldwin cited Desert
Equities, where the Delaware Supreme Court referred to bad faith under the implied
covenant as a “state of mind” involving “the conscious doing of a wrong because of
dishonest purpose or moral obliquity.” See id. at 1118 nn.110 & 111 (citing Desert
Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1208
& n.16 (Del. 1993)). Baldwin also cited Amirsaleh, where this court stated a party
could establish a breach of the implied covenant by showing that “the exercise of
discretion was done in bad faith (i.e., that it was motivated by an improper purpose
or done with a culpable mental state).” See id. (citing Amirsaleh v. Bd. of Trade of
City of N.Y., Inc., 2009 WL 3756700, at *5 (Del. Ch. Nov. 9, 2009)). After Baldwin,
bad intent can breach the implied covenant.

287 RBC Cap. Mkts., 129 A.3d at 865 n.191.

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Columbia Pipeline rejected as insufficient. But in RBC Capital, the Delaware

Supreme Court implicitly treated silence in the face of that obligation as substantial

participation.

There is a passage in RBC Capital that suggests the financial advisor owed a

duty to the stockholders, but the language is brief and elliptical. It states:

When parties to a transaction and their advisors travel down the road
of partial disclosure they have an obligation to provide the stockholders
with an accurate, full, and fair characterization of those historic events.
The Proxy Statement failed to disclose how RBC used the Rural sale
process to seek a financing role in the EMS transaction. Nor did it
disclose RBC’s courtship of Warburg. When viewed in conjunction with
the potential fees RBC was to receive for its financing services, the
investment bank’s pursuit of Warburg’s financing business was
demonstrative of a conflict that was unquestionably material, and
necessitated full and fair disclosure for the benefit of the stockholders.288

Read broadly, this passage says that where partial disclosures are concerned, “parties

to a transaction and their advisors . . . have an obligation to provide the stockholders

with an accurate, full, and fair characterization of those historic events.”289 A duty of

disclosure to stockholders would satisfy the Mindbody and Columbia Pipeline

framing, but RBC Capital would stand alone in recognizing it.290

288 Id. at 860–61 (cleaned up) (emphasis added).

289 Id. at 860 (cleaned up) (emphasis added).

290 Compare Shoe-Town, 1990 WL 13475, at *7 (holding that investment
banker retained by management did not owe any duty of disclosure to stockholders).
The court distinguished a New York decision that recognized such a duty,
characterizing the case as “factually distinguishable, however, because the
investment advisor in that case was hired by a special committee charged solely with
determining the fairness of the transaction for the shareholders” while the financial
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Mindbody and Columbia Pipeline do not provide much help in reconciling the

different approaches. In Mindbody, the Delaware Supreme Court characterized RBC

Capital as involving “aiding and abetting liability for a financial advisor who

advisor whose conduct was at issue “was hired by management to work for and
answer to management.” Id.

Under the heading of roads not taken, the Weinberger litigation originally
focused on the alleged inadequacies of Lehman Brothers’ performance when advising
the directors of UOP, Inc. In the post-trial decision entering judgment for the
defendants, then-Vice Chancellor Brown observed that “plaintiff has offered no
authority to indicate that an investment banking firm rendering a fairness opinion
as to the terms of a merger owes the same fiduciary duty to the minority shareholders
as does the majority.” Weinberger v. UOP, Inc., 426 A.2d 1333, 1348 (Del. Ch. 1981)
(subsequent history omitted). On appeal, the Delaware Supreme Court initially
issued a 2-to-1 decision affirming that outcome. Weinberger v. UOP, Inc., No. 58, 1981
(Del. Feb. 9, 1982) (subsequent history omitted). Justices Quillen and McNeilly did
not “find it fruitful in the present context to characterize the relationship between
Lehman Brothers and UOP, and the UOP minority, as anything but contractual.” Id.
at 3. They nevertheless concluded that “[t]he contract obviously created a duty,
including a duty to the minority,” although there was “no basis for liability in the
present record.” Id. Writing in dissent, Justice Duffy viewed the case as presenting
“important issues involving the responsibility of an investment banking firm, in the
context of a corporate merger.” Id. at 6 (Duffy, J., dissenting). He would have held
that by giving a fairness opinion, “knowing that it will be used to help persuade
minority public stockholders,” Lehman Brothers took on “a duty to exercise
reasonable care or competence in obtaining or communicating the information as to
the value of the UOP shares” and that “any failure to perform in accordance with that
standard would make Lehman Brothers liable to the public stockholders for negligent
misrepresentation under the circumstances stated in Restatement of the Law, Torts
2d § 552.” Id. at 7–8 (Duffy, J., dissenting). The justices thus unanimously regarded
Lehman Brothers as owing a duty to the public stockholders in that setting, although
they disagreed on the source. The Delaware Supreme Court granted the plaintiff’s
motion for reargument and vacated the decision. Weinberger v. UOP, Inc., No. 58,
1981 (Del. Mar. 16, 1982). The plaintiff dismissed Lehman Brothers, and the
questions about investment banker liability dropped out of the case. Nearly a year
later, the Delaware Supreme Court issued the landmark decision we know today,
which while critical of Lehman Brothers’ performance, does not comment on the
firm’s obligations or potential liability. See Weinberger, 457 A.2d 701.

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‘purposely misled the [seller’s] Board so as to proximately cause the Board to breach

its duty of care.’”291 That fairly describes much of what happened in RBC Capital, but

not the most apposite aspect of the case. The justices also described RBC Capital as

a situation where RBC “knew all of the relevant information and the board knew none

of it.”292 Fair, but that does not address the question of duty.

One possibility is that Mindbody and Columbia Pipeline overruled RBC

Capital both on the actual knowledge requirement and on what type of involvement

can constitute substantial participation. But decisions should be harmonized if

possible, and a more likely possibility is that the different approaches reflect the

application of the Restatement factors as a whole. RBC Capital did not address the

Restatement factors; Delaware decisions began using those factors after RBC Capital

to calm practitioner concern that any involvement in a transaction might support an

291 Mindbody, 332 A.3d at 393 (quoting RBC Cap. Mkts., 129 A.3d at 865).

Mindbody later returned to RBC Capital and again depicted that case as a scenario
where the board was “misled and ‘intentionally duped’ by RBC.” Id. at 401 (quoting
RBC Cap. Mkts., 129 A.3d at 863, 865–66). True, but part of the duping was through
a failure to disclose.

292 Id. at 401. Rather than engaging with the aspect of RBC Capital involving

a failure to disclose, Mindbody observed that in Buttonwood, “the Court of Chancery
held that a financial advisor was not liable for ‘passive awareness . . . of the omission
of material facts in disclosures to the stockholders, made by fiduciaries who
themselves were aware of the information.’” Id. at 393 (quoting Buttonwood, 2017 WL
3172722, at *10) (emphasis in original). Buttonwood thus involved two independent
factors that each potentially distinguished it from a third-party acquirer under a
contractual duty to speak: (i) no identifiable duty, and (ii) knowledge that the
fiduciaries already had the information.

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aiding and abetting claim.293 When considering all of the factors, aiding and abetting

might well exist for a sell-side financial advisor under circumstances where it could

not exist for a third-party acquirer.294

Mindbody and Columbia Pipeline were also post-trial decisions. At the

pleading stage, a complaint must contain factual allegations supporting a reasonable

inference that the aider and abettor actually knew that the primary violator’s conduct

was a fiduciary breach, actually knew that its own conduct was legally improper (even

if not inherently illegal), and actively participated in the primary violator’s

misconduct. For purposes of a motion to dismiss under Rule 12(b)(6), a complaint

need only plead facts supporting a reasonable inference of knowledge.295 Under Rule

9(b), a plaintiff can plead knowledge generally; “there is no requirement that knowing

participation be pled with particularity.”296 To plead participation, a plaintiff can

plead that the advisor “participated in the board’s decisions, conspired with [the]

293 The trial court decision in RBC Capital cited the Restatement but did not

discuss or apply the factors. See In re Rural/Metro Corp. S’holders Litig., 102 A.3d
205, 220 n.1 (Del. Ch. 2014). The following year, the Dole decision delved into the
factors as a framework for analyzing knowing participation. See Dole, 2015 WL
5052214, at *41.

294 Elec. Last Mile Sols., Inc. S’holder Litig., 2026 WL 207195, at *7–10 (Del.

Ch. Jan. 27, 2026).

295 See Dent, 2014 WL 2931180, at *17.

296 Id.

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board, or otherwise caused the board to make the decisions at issue.” 297 But

“‘[c]onclusory statements that are devoid of factual details to support an allegation of

knowing participation will fall short of the pleading requirement needed to survive a

Rule 12(b)(6) motion to dismiss.’”298 To state the obvious, a claim for aiding and

abetting might survive pleading-stage review, yet fail after trial.

1. Goldman

The plaintiffs allege that Goldman aided and abetted the fiduciary defendants

both in breaching their duties during the transaction process and in breaching their

duty of disclosure for purposes of the Proxy Statement. The Complaint states a claim

against Goldman under the first heading. Given the uncertainty about harmonizing

RBC Capital with Mindbody and Columbia Pipeline, the court defers ruling on that

issue under Rule 12(i).299

a. Aiding And Abetting During The Transaction Process

Claims that a party aided and abetted breaches of duty during a transaction

process are not one-size-fits-all affairs. The Restatement factors recognize that reality

by taking into account (1) the nature of the act encouraged, (2) the amount of

297 Malpiede, 780 A.2d at 1098.

298 Jacobs v. Meghji, 2020 WL 5951410, at *7 (Del. Ch. Oct. 8, 2020) (quoting

McGowan v. Ferro, 2002 WL 77712, at *2 (Del. Ch. Jan. 11, 2002)).

299 See Ct. Ch. R. 12(i).

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assistance given by the defendant, (3) his presence or absence at the time of the tort,

(4) his relation to the other, and (5) his state of mind.300

A good place to start is factor four: the relation between the aider and abettor

and the primary wrongdoer. “When a plaintiff alleges that a third-party acquirer

knowingly participated in a breach of fiduciary duty by sell-side directors, Delaware

law imposes an appropriately high pleading burden because an acquirer is expected

to bargain in its own interest.”301 “A plaintiff must plead meaningful facts to support

an inference that the acquirer attempted to create or exploit conflicts of interest on

the board or otherwise conspired with the directors to engage in a fiduciary

breach.”302 But as RBC Capital suggests, financial advisors are different. A third-

300 Dole, 2015 WL 5052214, at *42; accord Mindbody, 332 A.3d at 395–96.

301 NEA, 292 A.3d at 175; see, e.g., In re Rouse Props., Inc., Fiduciary Litig.,

2018 WL 1226015, at *25 (Del. Ch. Mar. 9, 2018) (explaining that the buyer was
“entitled to negotiate the terms of the Merger with only its interests in mind; it was
under no duty or obligation to negotiate terms that benefited [the seller] or otherwise
to facilitate a superior transaction for [the seller]”).

302 NEA, 292 A.3d at 175; see Malpiede, 780 A.2d at 1097–98; Del Monte Foods,

25 A.3d at 837. One Delaware Supreme Court decision suggests that Delaware law
has sought to create a special and highly protective standard for financial advisor
liability in general, stating: “Delaware has provided advisors with a high degree of
insulation from liability by employing a defendant-friendly standard that requires
plaintiffs to prove scienter and awards advisors an effective immunity from due-care
liability. . . . [M]ost professionals face liability under a standard involving mere
negligence, not the second highest state of scienter—knowledge—in the model penal
code.” Singh v. Attenborough, 137 A.3d 151, 152–53 (Del. 2016). But that comparison
confuses secondary liability for aiding and abetting another’s wrongdoing with
primary liability for one’s own wrongdoing. The former always requires scienter in
the form of knowing participation; there is nothing unique about that standard for
financial advisors.

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party acquirer is on the outside and expected to bargain in its self-interest. A sell-

side advisor is on the inside and expected to help the sell-side fiduciaries fulfill their

duties. Directors and officers rely on financial advisors for their advice and

expertise.303

The sell-side advisor’s position on the inside has knock-on effects for the first

three Restatement factors: (1) the nature of the act encouraged, (2) the amount of

assistance given by the defendant, and (3) his presence or absence at the time of the

tort. Investment banks play a “central role” in “the evaluation, exploration, selection,

and implementation of strategic alternatives.”304

The financial advisor has significant influence over the sale process and serves

as a source of critical information about sale processes in general, specific

counterparties, and the financial advisors’ interactions. The financial advisor often

carries out significant parts of its mandate on its own, then reports back to its

principal. An advisor could provide the fiduciary with false or materially misleading

303 See 8 Del. C. § 141(e); see also Kahn v. Tremont Corp., 694 A.2d 422, 429

(Del. 1997) (recognizing that “in complicated financial transactions such as this,
professional advisors have the ability to influence directors who are anxious to make
the right decision but who are often in terra cognito [sic]”); RJR Nabisco, 1989 WL
7036, at *16 (“Sophisticated and effective business generalists of the type likely to be
found on the board of such companies as RJR will seldom have the specialized skills
useful to most accurately value such securities. Our law, of course, recognizes the
appropriateness of directors relying upon the advice of experts when specialized
judgment is necessary as part of a business judgment.”).

304 Inovalon, 319 A.3d at 292 (internal quotation marks omitted); accord
Brookfield, 314 A.3d at 1132 (internal quotation marks omitted).

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information.305 An advisor could also withhold information in a manner that misleads

the fiduciary on a material point.306 Or an advisor might take action that undermined

the sale process,307 such as by tipping another party.308 While acknowledging that

breaches of duty in sale processes are likely rare and misconduct by financial advisors

305 See Goodwin v. Live Entm’t, Inc., 1999 WL 64265, at *28 (Del. Ch. Jan. 25,

1999) (granting summary judgment in favor of defendants charged with aiding and
abetting a breach of the duty of care but suggesting that such a claim could proceed
if “third-parties, for improper motives of their own, intentionally duped the Live
directors into breaching their duty of care”); see also In re Wayport, Inc. Litig., 76 A.3d
296, 322 n.3 (Del. Ch. 2013) (noting that “a non-fiduciary aider and abetter” could be
exposed to liability “if, for example, the non-fiduciary misled unwitting directors to
achieve a desired result”).

306 See Macmillan, 559 A.2d at 1283–84, 1284 & n.33 (describing
management’s knowing silence about a tip as “a fraud upon the Board”); Mesirov v.
Enbridge Energy Co., Inc., 2018 WL 4182204, at *15–16 (Del. Ch. Aug. 29, 2018)
(sustaining claim for aiding and abetting against financial advisor for preparing
misleading analyses and creating an informational vacuum that misled board); In re
TIBCO Software Inc. S’holders Litig., 2015 WL 6155894, at *25–26 (Del. Ch. Oct. 20,
2015) (same); Rural Metro, 88 A.3d at 99 (holding that investment banker knowingly
participated in board’s breach of duty where “RBC created the unreasonable process
and informational gaps that led to the Board’s breach of duty”); Del Monte Foods, 25
A.3d at 836–37 (holding that investment bank’s knowing silence about its buy-side
intentions, its involvement with the successful bidder, and its violation of a no-
teaming provision misled the board). Cf. Cinerama, Inc. v. Technicolor, Inc., 663 A.2d
1156, 1170 n.25 (Del. 1995) (“[T]he manipulation of the disinterested majority by an
interested director vitiates the majority’s ability to act as a neutral decision-making
body.”); In re El Paso Corp. S’holder Litig., 41 A.3d 432, 443 (Del. Ch. 2012) (“Worst
of all was that the supposedly well-motivated and expert CEO entrusted with all the
key price negotiations kept from the Board his interest in pursuing a management
buy-out of the Company’s E & P business.”).

307 Morrison v. Berry, 2020 WL 2843514, at *9 (Del. Ch. June 1, 2020) (citing

RBC Cap. Mkts., 129 A.3d at 849–50).

308 E.g., Rural Metro, 88 A.3d at 101–03; Presidio, 251 A.3d at 243–46, 268–80.

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equally so, the financial advisor’s central role makes it all the more conceivable that—

when a breach happens—the financial advisor will have assisted in the act and

understood its nature.

Of course, like other aiders and abettors, a financial advisor must act

knowingly. “To show that a financial advisor acted with scienter, a stockholder

plaintiff typically points to evidence of a conflict of interest diverting the advisor’s

loyalties . . . .”309 Conflicts of interest “can arise from multiple sources, including a

long-standing relationship or a compensation arrangement.”310

The Complaint pleads sufficient facts to state a claim against Goldman for

aiding and abetting breaches of duty during the transaction process. This decision

has already recognized that the Complaint states a claim against the sell-side

fiduciaries for breaching their duties. The Complaint pleads facts sufficient to support

an inference that Goldman knew about the breaches and substantially participated

in them.

First, Goldman worked with General Atlantic to identify its preferred

transaction structure and use that structure as the basis for the bidder outreach.

Goldman and General Atlantic inferably designed a narrow process to serve General

Atlantic’s preferences, despite knowing that more bidders might make a control bid

and that a narrow transaction process would constrain the Committee’s ability to

309 Rural Metro, 88 A.3d at 100.

310 Found. Bldg. Materials, 318 A.3d at 1170.

110
evaluate alternatives and maximize value. Evercore made precisely those points.

Goldman and General Atlantic ignored them.

Second, Goldman tipped Vista with price guidance when it told Vista that its

bid should be “above $22.00.”311 That was obviously improper.

Third, throughout the sale process, Goldman actively excluded Evercore, even

though Evercore was acting as the eyes and ears of the Committee. By doing so,

Evercore impaired the Committee’s ability to oversee and manage the sale process.

Sidelining the Committee helped General Atlantic act more freely, and General

Atlantic was Goldman’s primary client relationship.

The Complaint pleads facts sufficient to support an inference that Goldman

knew that General Atlantic was acting self-interestedly and in breach of its fiduciary

duties. Goldman knew that General Atlantic desired liquidity and bargained for

unique benefits from the Recapitalization, including the $500 million dividend.

Goldman knew that it should not be excluding Evercore and impairing the

Committee’s ability to monitor the sale process.

Goldman inferably had a motive to pursue the deal that General Atlantic and

Vista wanted, even if that transaction was not the best for the Company. Goldman

faced conflicts of interest due to its long-standing and ongoing relationships with

General Atlantic and Vista.

311 Compl. ¶ 281 (quoting Ex. D at 43; citing GS_00052160).

111
During the transaction process, Goldman was concurrently (i) advising

General Atlantic in a take-private transaction, (ii) advising a General Atlantic

portfolio company on strategic alternatives, (iii) advising and marketing at least three

General Atlantic funds, (iv) maintaining co-investments with General Atlantic in at

least six different companies, including at least one co-investment they initiated

during the sale process, (v) maintaining a lending relationship with General Atlantic,

in which Goldman had extended a €300 million loan, and (vi) maintaining a lending

relationship with a General Atlantic fund, in which Goldman had extended a $50

million revolver loan, due September 2025.

During the sale process, Goldman was concurrently (i) advising Vista

(including Wilson) on other transactions for two Vista portfolio companies, (ii)

maintaining a lending relationship with Vista, in which Goldman had extended an

unsecured $1.5 billion loan against Vista portfolio companies, as publicly reported in

July 2023, (iii) assisting Vista with a $1 billion cash injection in Finastra in

September 2023, and (iv) maintaining a lending relationship with Vista Management

Holdings, Inc., in which Goldman had extended a $50 million revolver loan, due

March 2027.

Because of those relationships, Goldman had an incentive to reach a

transaction that made General Atlantic and Vista happy, even if that transaction was

not the best result for the public stockholders. And that is inferably what happened.

The Complaint supports a reasonable inference that the Company’s minority

stockholders could have secured greater consideration if the Company had pursued a

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wider range of transactions from the start, including control bids, and included

parties interested in that type of transaction. The Complaint supports a reasonable

inference that if the Recapitalization had not involved holding back money for the

General Atlantic dividend, then the minority stockholders would have received more.

Goldman contends that Vista’s surprise control bid was an unforeseen event

that broke any proximate causation chain linking earlier alleged misconduct to later

harm. Hardly. It is reasonably conceivable that Vista’s control bid was wholly

foreseeable. Evercore anticipated it. Moreover, the shift in transaction structure from

a minority sale to a control sale did not wipe the slate clean. By that point, Goldman

had worked with General Atlantic to shape the process, sidelined the Committee and

Evercore, and tipped Vista.

Goldman also contends that the Complaint cannot support an inference of

scienter because the plaintiffs acknowledge that Goldman asked the Committee and

its counsel to approve its retention. But disclosing conflicts does not eliminate their

effect: “A board’s consent to a conflict does not give the advisor a ‘free pass’ to act in

its own self-interest and to the detriment of its client.”312 The fact of Committee

approval does not warrant pleading-stage dismissal.

312 RBC Cap. Mkts., 129 A.3d at 855. Indeed, disclosure can turn out to be

detrimental, because the disclosing party may feel it has discharged its obligations
by making the disclosure, resulting in the disclosing party feeling less constrained in
acting self-interestedly. See Daniel P. Guernsey, Jr., Requiring Broker-Dealers to
Disclose Conflicts of Interest: A Solution Protecting and Empowering Investors, 73 U.
Mia. L. Rev. 1029, 1056–57 (2019); Robert A. Prentice, Moral Equilibrium: Stock
Brokers and the Limits of Disclosure, 2011 Wis. L. Rev. 1059, 1099–105 (2011);
113
The plaintiffs adequately allege that Goldman knowingly participated in

breaches of fiduciary duty resulting from General Atlantic’s conflicts of interest.

b. Aiding And Abetting Disclosure Breaches

The plaintiffs also allege that Goldman aided and abetted the sell-side

fiduciaries in failing to disclose material information about Goldman’s relationships

with General Atlantic, Vista, and Summit. Although there is tension between the

Delaware Supreme Court’s reasoning in RBC Capital and its more recent analysis of

conscious inaction in Mindbody and Columbia Pipeline, the latter decisions instruct

courts to follow the Restatement’s multifactor approach. Because third-party

acquirers and sell-side financial advisors are differently situated and play distinct

roles, the outcome is inferably different. The better course at this stage is to defer a

decision on this issue under Rule 12(i).

If RBC Capital remains good law, then the allegations against Goldman state

a claim for aiding and abetting a breach of the duty of disclosure. This decision has

found that the Proxy Statement failed to disclose the full extent of Goldman’s

relationships with General Atlantic, Vista, and Summit. This decision has also found

that the Proxy Statement failed to provide an accurate picture of Goldman’s role. At

the pleading stage, it is inferable that Goldman withheld the pertinent information,

putting this case on all fours with RBC Capital and stating a claim on which relief

Daylian M. Cain, George Loewenstein & Don A. Moore, The Dirt on Coming Clean:
Perverse Effects of Disclosing Conflicts of Interest, 34 J. Legal Stud. 1, 7 (2005).

114
can be granted. That outcome also comports with Electric Last Mile, a post-Mindbody,

post-Columbia Pipeline decision that upheld a claim for aiding and abetting

disclosure violations against a financial advisor on similar facts.313

Admittedly, the logic of Mindbody and Columbia Pipeline pulls in the other

direction, at least for the Restatement element that considers the nature and amount

of assistance given by the secondary actor. Under those decisions, Goldman would

have to owe a duty to the public stockholders. Although RBC Capital supports the

existence of such a duty, it does so in passing and only in three words.314 RBC Capital

has not been widely read as recognizing a direct duty of disclosure between a financial

advisor and public company stockholders, which would provide stockholders with a

direct cause of action against advisors. Despite what RBC Capital says, reading the

decision that way would break new ground.

A more conventional duty would run from Goldman to the Company, either

because Goldman was an agent or under the implied covenant of good faith and fair

dealing inherent in its engagement letter. Under RBC Capital, that duty would

require a financial advisor “not to act in a manner that is contrary to the interests of

the board of directors, thereby undermining the very advice that it knows the

313 Elec. Last Mile Sols., 2026 WL 207195, at *7–10.

314 RBC Cap. Mkts., 129 A.3d at 860 (“When parties to a transaction and their

advisors travel down the road of partial disclosure they have an obligation to provide
the stockholders with an accurate, full, and fair characterization of those historic
events.” (cleaned up) (emphasis added)).

115
directors will be relying upon in their decision making processes.”315 Yet assuming

that such a duty includes an obligation to provide information about conflicts of

interest, that duty would run to the Company, not to the Company’s stockholders.

Under Mindbody and Columbia Pipeline, that would not be enough.

Finally, accepting that Goldman owed a duty that ran to the Company and

knowingly breached it by failing to provide information, Mindbody and Columbia

Pipeline hold that failing to provide information in the face of a known duty amounts

only to passive inaction. It does not amount to the type of active assistance necessary

to satisfy the substantial participation requirement.

Under the logic of Mindbody and Columbia Pipeline, therefore, the claim

against Goldman for aiding and abetting might well not involve actionable assistance.

After all of the focus on the disclosure of information by financial advisors, and

particularly on the importance of conflict disclosure, that would leave the law in an

odd place. It therefore seems more likely that while conscious inaction in the face of

a duty to act was not enough for the Delaware Supreme Court to find that acquirers

had aided and abetted claims for breach of the duty of disclosure, a different calculus

could apply to sell-side financial advisors.

Rule 12(i) provides that “[t]he Court may defer until trial ruling on any defense

listed in Rule 12(b)—whether made in a pleading or by motion—or any motion under

315 Id. at 865 n.191.

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Rule 12(c).”316 “A party does not have a right to a pleading-stage ruling at the start of

a case.”317 Likewise, Rule 12(b)(6) asks only if a complaint “state[s] a claim upon

which relief can be granted.”318 It is not necessary that the court determine at the

pleading stage whether every theory states a claim on which relief can be granted.

There can be significant value in dispensing with meritless claims at the
pleading stage. But a court need not examine the sufficiency of every
count in a complaint or consider every argument that a defendant has
advanced. That is particularly true when an issue will not result in the
dismissal of a defendant from the case and where the case involves a
common nucleus of operative fact that will be the focus of discovery in
any event. In that setting, the case can readily proceed past the pleading
stage.319

Those principles apply here.

The Complaint states at least one claim for relief against Goldman. The

dispute concerns a common nucleus of operative fact, such that ruling on the claim

for aiding and abetting a disclosure violation will not alter the scope of discovery.

Goldman will face the same litigation burdens in any event and will suffer prejudice

from the absence of a pleading-stage assessment. Even if the court dismissed the

316 Ct. Ch. R. 12(i).

317 Harris v. Harris, 289 A.3d 310, 342 (Del. Ch. 2023); see Spencer v. Malik,

2021 WL 719862, at *5 (Del. Ch. Feb. 23, 2021). See also Pattern Energy Gp., 2021
WL 1812674, at *46 & n.612.

318 Ct. Ch. R. 12(b)(6).

319 Cygnus Opportunity Fund, LLC v. Wash. Prime Gp., LLC, 302 A.3d 430, 464

(Del. Ch. 2023).

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claim, the dismissal would be interlocutory and could be revisited, subject to the law

of the case doctrine, for good cause shown.

In that context, the court need not try to definitively harmonize RBC Capital

with the more recent approach taken in Mindbody and Columbia Pipeline. The issue

may never need to be addressed, because the parties may settle, discovery may

disprove key factual allegations, or other issues may take precedence. The court

therefore will defer ruling on the claim for aiding and abetting a breach of the duty

of disclosure until later in the case—and potentially after trial. Goldman’s motion to

dismiss that aspect of the Complaint is denied under Rule 12(i).

2. Vista

The plaintiffs also claim that Vista aided and abetted the sell-side fiduciaries

in breaching their duties. Vista was in the classic position of a third-party arms’-

length buyer, precisely the scenario addressed in the Delaware Supreme Court’s

recent decisions in Mindbody and Columbia Pipeline. In Mindbody, the justices

stated that Delaware’s high standard for knowing participation was designed not only

to protect a third-party acquirer from liability, but also from the “costs of

discovery.”320 That language encourages trial courts to address claims for aiding and

abetting against third-party acquirers at the pleading stage.321

320 Mindbody, 332 A.3d at 392.

321 Sjunde AP-Fonden v. Activision Blizzard, Inc., 2025 WL 2803254, at *26

(Del. Ch. Oct. 2, 2025).

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The plaintiffs allege that Vista aided and abetted the sell-side fiduciaries in

breaching their duties during the sale process. But the plaintiffs have not pled any

action that would go beyond the facts found insufficient in Mindbody or Columbia

Pipeline.

If anything, the Complaint alleges facts that fall short of what the Delaware

Supreme Court held to be inadequate in those recent decisions. Vista made an offer

as part of a transaction that General Atlantic had made contingent on MFW

protections. The Complaint does not support an inference that Vista thought its own

actions were improper or believed that any of the Company’s fiduciaries were

violating their duties. The Complaint also does not support an inference that Vista

used the post-closing dividend to suborn General Atlantic. To the contrary, the bid

process letter asked all potential buyers to address the amount of funds to be used for

a distribution of proceeds to General Atlantic.

The Complaint also fails to plead aiding and abetting with respect to disclosure

breaches. Nothing distinguishes this case from Mindbody itself.322

The claims against Vista are dismissed.

III. CONCLUSION

The Complaint supports a reasonable inference that the defendants failed to

comply with the requirements of MFW, resulting in entire fairness serving as the

322 See Mindbody, 332 A.3d at 401.

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operative standard of review. Under this standard of review, the Complaint states a

claim on which relief can be granted.

The Complaint supports a reasonable inference that Bennett, Hamilton, and

Dunnam could be held liable on non-exculpated claims. The Complaint does not

support a reasonable inference that Rodriguez could be held liable on non-exculpated

claims.

The Complaint supports a reasonable inference that Goldman aided and

abetted breaches of fiduciary duty by the sell-side fiduciaries. The Complaint does

not support a similar inference as to Vista.

The motions to dismiss are therefore denied except as to Rodriguez and Vista,

whose motions to dismiss are granted.

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