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suggests that some controlling shareholders paid more than they had to in their freeze-out

transactions because of their choice of outside counsel.

This conclusion is consistent with Coates (2001), which finds a difference between Silicon

Valley and New York City law firms in the installation of takeover defenses at IPO firms during

the period 1991-1992, but convergence between Silicon Valley and New York City firms by

1998. In fact, this study and Coates (2001) represent bookends that portray a similar picture: at

both entry (IPO) and exit (freeze-out) from public status, new corporate law practices (takeover

defenses, tender offer freeze-outs) seem to disseminate slowly across law firms. Coates (2001)

infers that the new practice in question (takeover defense) was beneficial to clients from the fact

that the incidence of defenses increased over time. This paper presents more direct evidence on

the question of optimality for clients by examining deal outcomes. Assuming that controlling

shareholders would generally prefer to pay less rather than more when freezing out the minority,

the evidence presented here suggests that firms with more M&A experience were more effective

in achieving this goal.

7. Conclusion

Recent changes in the judicial protection afforded minority shareholders under Delaware

corporate law have attracted considerable practitioner and academic commentary over the past

three years. This paper presents the first systematic empirical evidence on the influence of these

doctrinal movements on freeze-out form and outcomes. On outcomes, I find that controlling

shareholders are able to pay less in tender offer freeze-outs than in merger freeze-outs. This

difference is statistically and economically meaningful, and is consistent with New York City

practitioner views that controlling shareholders have more bargaining power against special


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