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← Series 79: M&A, Tender Offers & Restructuring
Series 79 practice questioneasySqueeze-Out Mergers and Appraisal Rights

Appraisal rights allow dissenting shareholders in a merger to:

  1. ABlock the merger from proceeding
  2. BPetition a court to determine the fair value of their shares and receive cash payment for that amount✓ Correct answer
  3. CForce the acquirer to increase the merger consideration for all shareholders
  4. DRetain their shares in the surviving entity indefinitely
Explanation

Why B — Petition a court to determine the fair value of their shares and receive cash payment for that amount

Appraisal rights (also called dissenters' rights) allow shareholders who disagree with the merger consideration to petition a court to independently determine the fair value of their shares. Shareholders who perfect their appraisal rights receive a cash payment from the surviving company equal to the court-determined fair value. These rights provide an important protection for minority shareholders who believe the merger price is inadequate.

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