Revlon Duties, Going Private and VC/PE Conflicts.

Boardroom Governance Newsletter #39 | April 12, 2023.

Art by DALL·E

“Stollmeyer [the former CEO of Mindbody] suffered a disabling conflict because he had an interest in near-term liquidity, a desire to sell fast, and an expectation that he would receive post-Merger employment accompanied by significant equity-based incentives as a Vista CXO. Stollmeyer tilted the sale process by strategically driving down Mindbody’s stock price and providing Vista with informational and timing advantages during the due-diligence and go-shop periods. And the Board failed to adequately oversee Stollmeyer.” Chancellor Kathaleen McCormick of the Delaware Chancery Court (March 2023).

In re Mindbody, Inc. Stockholder Litigation (Del. Ch. Mar. 15, 2023), Chancellor Kathaleen McCormick of the Delaware Chancery Court issued a 120-page post-trial memorandum opinion with important lessons for CEOs and corporate directors in the context of take-private transactions.

The case involves Mindbody, a software-as-a-service (“SaaS”) company that serves the fitness, wellness, …