In Re: Appraisal of Solera Holdings, Inc. ( 2018 )


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  •    IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
    )
    IN RE APPRAISAL OF SOLERA            )   CONSOLIDATED
    HOLDINGS, INC.                       )   C.A. No. 12080-CB
    )
    MEMORANDUM OPINION
    Date Submitted: April 6, 2018
    Date Decided: July 30, 2018
    Stuart M. Grant, Christine M. Mackintosh, and Vivek Upadhya of GRANT &
    EISENHOFER P.A., Wilmington, Delaware; Daniel L. Berger of GRANT &
    EISENHOFER P.A., New York, New York; Lawrence M. Rolnick, Steven M.
    Hecht, and Jonathan M. Kass of LOWENSTEIN & SANDLER LLP, New York,
    New York; Attorneys for Petitioners.
    David E. Ross and S. Michael Sirkin of ROSS ARONSTAM & MORITZ LLP,
    Wilmington, Delaware; Yosef J. Riemer, Devora W. Allon, Elliot C. Harvey
    Schatmeier, Richard Nicholson, and Madelyn A. Morris of KIRKLAND & ELLIS
    LLP, New York, New York; Attorneys for Respondent.
    BOUCHARD, C.
    In this appraisal action, the court must determine the fair value of petitioners’
    shares of Solera Holdings, Inc. as of March 3, 2016, when Vista Equity Partners
    acquired Solera for $55.85 per share, or approximately $3.85 billion in total equity
    value, in a merger transaction. Unsurprisingly, the parties have widely divergent
    views on this question.
    Relying solely on a discounted cash flow analysis, petitioners contend that the
    fair value of their shares is $84.65 per share—approximately 51.6% over the deal
    price. Until recently, respondent consistently argued that the “best evidence” of the
    fair value of Solera shares is the deal price less estimated synergies, equating to
    $53.95 per share. After an appraisal decision in another case recently used the
    “unaffected market price” of a company’s stock to determine fair value, however,
    respondent changed its position to argue for the same measure of value here, which
    respondent contends is $36.39 per share—about 35% below the deal price.
    Over the past year, our Supreme Court twice has heavily endorsed the
    application of market efficiency principles in appraisal actions. With that guidance
    in mind, and after carefully considering all relevant factors, my independent
    determination is that the fair value of petitioners’ shares is the deal price less
    estimated synergies—i.e., $53.95 per share.
    As discussed below, the record reflects that Solera was sold in an open process
    that, although not perfect, was characterized by many objective indicia of reliability.
    The merger was the product of a two-month outreach to large private equity firms
    followed by a six-week auction conducted by an independent and fully authorized
    special committee of the board, which contacted eleven financial and seven strategic
    firms. Public disclosures made clear to the market that the company was for sale.
    The special committee had competent legal and financial advisors and the power to
    say no to an underpriced bid, which it did twice, without the safety net of another
    bid. The merger price of $55.85 proved to be a market-clearing price through a 28-
    day go-shop that the special committee secured as a condition of the deal with Vista,
    one which afforded favorable terms to allow a key strategic competitor of Solera to
    continue to bid for the company.
    The record further suggests that the sales process was conducted against the
    backdrop of an efficient and well-functioning market for Solera’s stock. Before the
    merger, for example, Solera had a deep base of public stockholders, its shares were
    actively traded on the New York Stock Exchange and were covered by numerous
    analysts, and its debt was closely monitored by ratings agencies.
    In short, the sales process delivered for Solera stockholders the value
    obtainable in a bona fide arm’s-length transaction and provides the most reliable
    evidence of fair value. Accordingly, I give the deal price, after adjusting for
    synergies in accordance with longstanding precedent, sole and dispositive weight in
    determining the fair value of petitioners’ shares as of the date of the merger.
    2
    I.        BACKGROUND
    The facts recited in this opinion are my findings based on the testimony and
    documentary evidence submitted during a five-day trial. The record includes over
    400 stipulations of fact in the Stipulated Joint Pre-Trial Order (“PTO”),1 over 1,000
    trial exhibits, including fourteen deposition transcripts, and the live testimony of four
    fact witnesses and three expert witnesses. I accord the evidence the weight and
    credibility I find it deserves.
    A.    The Parties
    Respondent Solera Holdings, Inc. (“Solera” or the “Company”) is a Delaware
    corporation with headquarters in Westlake, Texas.2 Solera was founded in 2005 and
    was publicly traded on the New York Stock Exchange from May 2007 until March
    3, 2016, when it was acquired by an affiliate of Vista Equity Partners (“Vista”) in a
    merger transaction (the “Merger”).3
    From Solera’s inception through the Merger, Tony Aquila served as Chairman
    of the Board of Directors (the “Board”), Chief Executive Officer, and President of
    Solera.4 Over this time period, Aquila made all top-level decisions about product
    1
    The court appreciates the parties’ efforts in reaching agreement on a thorough set of
    factual stipulations.
    2
    PTO ¶ 75.
    3
    
    Id. ¶¶ 1,
    77 & Ex. A.
    4
    
    Id. ¶ 81.
                                                3
    innovation, corporate marketing, and investor relation efforts.5 After the Merger,
    Aquila remained the CEO of Solera.6
    Petitioners consist of seven funds that were stockholders of Solera at the time
    of the Merger: Muirfield Value Partners LP, Fir Tree Value Master Fund, L.P., Fir
    Tree Capital Opportunity Master Fund, L.P., BlueMountain Credit Alternatives
    Master Fund L.P., BlueMountain Summit Trading L.P., BlueMountain Foinaven
    Master Fund L.P., and BlueMountain Logan Opportunities Master Fund L.P.
    Petitioners collectively hold 3,987,021 shares of Solera common stock that are
    eligible for appraisal.7
    B.     Solera’s Business
    In early 2005, Aquila founded Solera with aspirations to bring about a digital
    evolution of the insurance industry, starting with the processing of automotive
    insurance claims.8         Aquila viewed Solera as a potential disruptor, akin to
    Amazon.com, Inc., in its specific industry.9
    5
    
    Id. ¶ 82.
    6
    
    Id. ¶ 83.
    7
    
    Id. ¶¶ 12,
    22-24, 30-32, 39.
    8
    
    Id. ¶¶ 76,
    80.
    9
    Tr. 369-70, 375 (Aquila).
    4
    Solera, in its current form, is a global leader in data and software for
    automotive, home ownership, and digital identity management.10 At the time of the
    Merger, Solera’s business consisted of three main platforms: (i) Risk Management
    Solutions; (ii) Service, Maintenance, and Repair; and (iii) Customer Retention
    Management.11 The Risk Management Solutions platform helps insurers digitize
    and streamline the claims process with respect to automotive and property content
    claims.12         The Service, Maintenance, and Repair platform digitally assists car
    technicians and auto service centers to diagnose and repair vehicles efficiently,
    accurately, and profitably, and to identify and source original equipment
    manufacturer and aftermarket automotive parts.13            The Customer Retention
    Management platform provides consumer-centric and data-driven digital marketing
    solutions for businesses that serve the auto ownership lifecycle, including property
    and casualty insurers, vehicle manufacturers, car dealerships, and financing
    providers.14 Solera was operating in 78 countries at the time of the Merger.15
    10
    PTO ¶ 117.
    11
    
    Id. ¶ 118.
    12
    
    Id. ¶ 120.
    13
    
    Id. ¶ 125.
    14
    
    Id. ¶ 128.
    15
    Tr. 659-60 (Giger).
    5
    C.       Solera Expands Aggressively Through Acquisitions
    Solera’s business was not always so diverse. During the Company’s early
    years, the vast majority of Solera’s revenues was derived from claims processing.16
    But the claims business was facing pressure17 as a result of maturation,18 advances
    in automotive technology like collision avoidance and self-driving cars,19 and
    competition.20
    In August 2012, Aquila implemented a plan called “Mission 2020” to increase
    Solera’s revenue and EBITDA through acquisitions and diversification.21 Solera
    aspired to become a “cognitive data and software and services company” that would
    address the entire lifecycle of a car.22
    The Mission 2020 goals included growing revenue from $790 million in fiscal
    year 2012 to $2 billion by fiscal year 2020, and increasing adjusted EBITDA from
    $345 million to $800 million over that same period.23 To meet these benchmarks,
    16
    PTO ¶¶ 134-138.
    17
    
    Id. ¶ 163.
    18
    Tr. 23-24 (Cornell); JX0121.0007.
    19
    Tr. 32 (Cornell); JX0092.0012-13.
    20
    Tr. 207-08 (Cornell); 758-60 (Yarbrough); JX0092.0014-15.
    21
    PTO ¶¶ 159-61, 163.
    22
    Tr. 372-73, 381 (Aquila).
    23
    PTO ¶ 160.
    6
    Solera implemented its “Leverage.           Diversify.      Disrupt.” (“LDD”) business
    strategy.24
    LDD was a three-pronged strategy. First, Solera sought to “leverage” its
    claims processing revenue in a given geographic area to gain a foothold in that area.
    Second, Solera sought to “diversify” its service offerings in the given geographic
    area.      Third, Solera’s longer-term objective was to “disrupt” the market by
    integrating its service offerings such that vehicle owners and homeowners could use
    Solera’s software to manage their purchases, maintenance, and insurance claims all
    in one place.25
    D.       The Market’s Reaction to LDD
    Between the formulation of Mission 2020 and the Merger, Solera invested
    approximately $2.1 billion in acquisitions.26 These acquisitions often were “scarcity
    value transactions” that involved Solera paying a premium for unique assets. 27 The
    multiples Solera paid in these acquisitions not only were relatively high but were
    increasing over time, generating lower returns on invested capital.28 As a result,
    24
    
    Id. ¶ 132.
    25
    
    Id. ¶ 133.
    26
    
    Id. ¶ 165.
    27
    Tr. 386-88 (Aquila).
    28
    
    Id. at 387
    (Aquila), 1063 (Hubbard); JX0899.0050-51.
    7
    Solera’s leverage increased while its EPS essentially remained flat and its EBITDA
    margins shrank.29
    Some analysts were skeptical of Solera’s evolution-through-acquisitions
    strategy, taking a “show me” approach to the Company. 30 These analysts struggled
    to understand Solera’s diversification plan31 and complained that management’s lack
    of transparency about the Company’s strategy impeded their ability to value Solera
    appropriately.32 Aquila, the Board, and other analysts believed that the market
    misunderstood Solera’s value proposition and that its stock traded at a substantial
    discount to fair value.33
    Compounding the challenges Solera was facing in the equity markets, Solera
    was encountering difficulties in the debt markets. Solera needed to have access to
    debt financing to execute its acquisition strategy, but by the time of the Merger,
    Solera was unable to find lenders willing to finance its deals due to its highly-levered
    balance sheet. For example, upon the announcement that Solera planned to issue
    tack-on notes in November 2014, “the proceeds of which, along with balance sheet
    29
    JX1101.0056, 151-52, 175-76.
    30
    JX1101.0030.
    31
    PTO ¶ 241; Tr. 478-79 (Aquila).
    32
    PTO ¶¶ 244-46.
    33
    Tr. 464-67 (Aquila), 861 (Yarbrough); JX0175.0108 (William Blair & Company);
    JX0301.0001 (Goldman Sachs); JX0325.0001 (Goldman Sachs).
    8
    cash, [were] expected to effect a strategic acquisition,” Moody’s Investors Service
    downgraded Solera’s credit rating from Ba2 to Ba3.34 Moody’s noted that “the
    company has been actively pursuing acquisitions, often at very high purchase
    multiples,” and warned that “[r]atings could be downgraded [further] if the company
    undertakes acquisitions that, after integration, fail to realize targeted margins.”35
    In late May 2015, management began discussing an $850 million notes
    offering with Goldman Sachs, the proceeds of which the Company planned to use to
    fund acquisitions and refinance outstanding debt.36 The offering fell approximately
    $11.5 million short, and Goldman was forced to absorb the notes that it could not
    sell into the market.37       In July 2015, Moody’s downgraded Solera again,38
    commenting “[t]he ongoing, cumulative impacts of debt assumed for acquisitions
    and for the buyout of its joint venture partner’s 50% share . . . plus ramped up share
    buybacks and dividends, have pushed Moody’s expectations for [Solera’s]
    intermediate-term leverage to approximately 7.0 times, a level high even for a B1-
    34
    JX0140.0003. “Ba” obligations are those “judged to be speculative and are subject to
    substantial credit risk.” Rating Symbols and Definitions, MOODY’S INV’R SERV. 6 (June
    2018),
    https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
    35
    JX0140.0003.
    36
    Tr. 409-11 (Aquila); JX0258.004.
    37
    Tr. 412-14 (Aquila); JX0318.001.
    38
    Tr. 416-17 (Aquila); JX0310.0004.
    9
    rated credit.”39 As Aquila testified, Solera was “out of runway” shortly before the
    Merger to execute the rest of its acquisition strategy because creditors were
    unwilling to loan funds to Solera at tolerable interest rates.40
    E.       Aquila Expresses Displeasure with his Compensation at Solera
    Solera’s stock price affected Aquila personally. His compensation was tied
    to “total shareholder return,” and the majority of his stock options were underwater.41
    Aquila did not receive a performance bonus in 2011, 2012, or 2013.42 In February
    2015, he emailed Thomas Dattilo, Chair of the Compensation Committee, saying
    “I’ve poured a great deal of time, inventions and sacrifice during this time in the
    company’s transition and I really need to get something meaningful for it.”43 At one
    point, Aquila threatened to leave Solera if his compensation was not reconfigured.44
    The Board recognized Aquila’s value to the Company and took his request
    and threat to leave seriously. Dattilo commented “the way [S]olera is structured, we
    would probably need three people to replace him, and even that would not really
    39
    JX0310.0004. “B” obligations are those “considered speculative and are subject to high
    credit risk.” Rating Symbols and Definitions, MOODY’S INV’R SERV. 6 (June 2018),
    https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
    40
    Tr. 414 (Aquila).
    41
    
    Id. at 460,
    485 (Aquila); JX0088.0002.
    42
    Tr. 461 (Aquila).
    43
    PTO ¶ 222.
    44
    
    Id. ¶ 224;
    JX0174.0002-03.
    10
    fulfill the Solera requirements because of the pervasive founder[’]s culture found
    there. . . . Solera possibly couldn’t exist without Tony.”45          Although the
    Compensation Committee was looking for a solution to address Aquila’s underwater
    stock options, they ultimately “didn’t get it done.”46
    F.       Aquila Privately Explores a Sale of Solera
    Around the time that Aquila complained to the Board about his compensation,
    he began to engage in informal discussions with private equity firms regarding a
    potential transaction to take the Company private. In December 2014, Aquila was
    introduced to David Baron, an investment banker at Rothschild Inc.
    (“Rothschild”).47 Aquila and Baron met again in January 2015, when they “talked
    through a bunch of buy-side ideas” and Aquila expressed his frustration at the
    disconnect between Solera’s stock price performance relative to its peers and his
    own views on the Company’s growth opportunities.48
    In March 2015, Aquila was introduced to Orlando Bravo, a founder of the
    private equity firm Thoma Bravo LLC (“Thoma Bravo”), and Robert Smith, the
    45
    JX0174.0002.
    46
    Tr. 464 (Aquila).
    47
    PTO ¶ 251.
    48
    
    Id. ¶ 252.
                                               11
    founder of Vista.49 Before these two meetings, Aquila was aware that both Thoma
    Bravo and Vista recently had launched new multi-billion dollar funds.50
    On April 29, 2015, Baron contacted Brett Watson, the head of Koch Equity,
    to tell him, without identifying Solera as the target, about an opportunity to invest in
    preferred equity.51 Baron wrote in an email to Watson: “I’d like you to speak for as
    much of pref[erred stock] as possible – Ceo objective is to try to get control back[.]
    I’m going to clear it w[ith] chairman/ceo next week.”52
    On May 4, 2015, Baron travelled to Aquila’s ranch in Jackson Hole,
    Wyoming, bringing with him a presentation book that included leverage buyout
    (“LBO”) analyses that the two had previously discussed.53 Two days later, during
    an earnings call on May 6, Aquila raised the possibility of taking Solera private as a
    means of returning money to its stockholders while still pursuing its growth strategy:
    Q (Analyst): And just if I can bring that around to [the Solera CFO’s]
    comment about being opportunistic in share repurchases when you
    think the stock is detached from intrinsic value, you haven’t bought a
    lot of stock. So how do we square that circle in terms of what you think
    the Company is worth today?
    A (Aquila): Look, you’re bringing up a great point. So, look, it is a
    chicken-or-egg story. We’re going to make some of you happy, which
    49
    Tr. 480 (Aquila); PTO ¶¶ 258-60.
    50
    Tr. 481-84 (Aquila).
    51
    PTO ¶ 262.
    52
    JX0208.0002.
    53
    Tr. 500-01 (Aquila); JX1120.0004, 17.
    12
    we’re trying to go down—we’re trying to keep the ball down the middle
    of the fairway. We definitely like to hit the long ball as much as we
    can. But in reality, we have to do what we’re doing, and we have to
    thread the needle the way we are. Our only other alternative is either
    to take up leverage, buy stock right now. That’s going to cause a ratings
    issue. That’s going to cause some dislocation. We want to buy content
    because we want double-digit businesses in the emerging content world
    as apps take a different role on your phone to manage your risks and
    your asset. So when you think of that, we’ve done a decent job. We
    bought, I don’t know, $300 million worth of stock back since we did
    the stock buying program, and our average price is, like, $52, $53.
    So we’re kind of dealing with all the factors—we got the short game
    playing out there. And we’ve got to thread the needle. And the only
    other option to that is to go private and take all the shares out.54
    Aquila testified that this comment was “not preplanned,” and he was not “trying to
    suggest that [going private] was a decision that had been made.”55
    A few days later, on May 11, 2015, Aquila met with Smith from Vista and his
    partner Christian Sowul in Austin, Texas.56 After the meeting, Sowul followed up
    with Baron, saying “we are very interested. [T]ony sounded like now is the time.
    [N]ext 4-6 weeks.”57
    Also on May 11, the Board commenced a series of meetings and dinners in
    Dallas, Texas.58 Before these meetings, Aquila discussed with every Board member
    54
    JX0214.0014-15 (emphasis added).
    55
    Tr. 424-25 (Aquila).
    56
    JX0251.0001.
    57
    JX0234.0001.
    58
    Tr. 762-63 (Yarbrough).
    13
    the possibility of pursuing strategic alternatives, given that Solera was “out of
    runway” to execute its growth-by-acquisition strategy.59 Company director Stuart
    Yarbrough encouraged Aquila to have these conversations with the other directors,
    and explained that the Board felt Solera was “being criticized in the market” and
    knew that the Company was paying higher multiples for larger acquisitions.60
    On May 12, 2015, Company director Michael Lehman emailed Yarbrough
    and Larry Sonsini of the law firm Wilson Sonsini Goodrich & Rosati about the
    possibility of retaining his firm to assist in reviewing strategic alternatives. Lehman
    stated in the email: “Tony and the board have just begun conversations about
    ‘evaluating strategic alternatives,’” of which “[o]ne of the more attractive conceptual
    alternatives is a ‘going private,’ which would likely mean that the CEO would have
    significant stake in that entity [] (think Dell computer type transaction).”61
    In an executive session on May 13, the Board unanimously agreed that Aquila
    should “test the waters” with financial sponsors.62 In doing so, the Board recognized
    that Aquila would probably have a significant equity stake in a private Solera, posing
    an “inherent” conflict in his outreach to private equity firms.63 The Board authorized
    59
    
    Id. at 425-27
    (Aquila), 760-62 (Yarbrough).
    60
    
    Id. at 862-64
    (Yarbrough).
    61
    JX0250.0003.
    62
    Tr. 428-29 (Aquila), 762-63, 816 (Yarbrough).
    63
    Tr. 829-31 (Yarbrough); JX0250.0003.
    14
    Aquila to “put together a target list” of large private equity firms and to “go have
    discussions and see what the interest was.”64 The Board decided to start with private
    equity firms and add strategic firms later in the process because it believed that
    strategic firms presented a greater risk of leaks65 and an interested strategic bidder
    could get up to speed quickly.66 The Board also wanted to focus on larger private
    equity firms to avoid the complexity of firms having to partner with each other.67 At
    this stage, the Board prohibited “any use of nonpublic information.”68
    G.       A Special Committee is Formed after Aquila “Tests the Waters”
    Between May 13 and June 1, 2015, Aquila, with assistance from Rothschild,
    contacted nine private equity firms:        Pamplona, Silver Lake, Apax, Access
    Industries, Hellman & Friedman, Vista, Blackstone, CVC Capital Partners, and
    Thoma Bravo.69 Aquila and Rothschild had follow-up contact with at least Silver
    Lake,70 Blackstone,71 and Thoma Bravo72 between June 1 and July 14, 2015. After
    64
    Tr. 865 (Yarbrough).
    65
    
    Id. at 764
    (Yarbrough).
    66
    
    Id. at 764
    -65 (Yarbrough).
    67
    
    Id. at 865
    (Yarbrough).
    68
    
    Id. at 764
    (Yarbrough).
    69
    PTO ¶¶ 268, 271-78.
    70
    
    Id. ¶ 279.
    71
    
    Id. ¶¶ 277,
    280, 282.
    72
    
    Id. ¶¶ 278,
    283-84.
    15
    his meeting with Aquila, Orlando Bravo emailed Baron, saying “Unreal meeting. I
    love Tony man. We want to do this deal.”73 On July 18, 2015, Aquila reported back
    to the Board that Thoma Bravo was going to make an offer for Solera.74
    On July 19, 2015, Thoma Bravo submitted an indication of interest to
    purchase Solera at a price between $56-$58 per share. In the letter submitting their
    bid, Thoma Bravo stated that they “are contemplating this deal solely in the context
    of being able to partner with Tony Aquila and his management team.”75
    On July 20, 2015, the Board discussed the indication of interest received from
    Thoma Bravo and formed a special committee of independent directors to review
    the Company’s strategic alternatives (the “Special Committee”).76 The Special
    Committee consisted of Yarbrough (Chairman), Dattilo, and Patrick Campbell, each
    of whom had served on multiple boards and had extensive M&A experience.77 The
    Special Committee was granted the “full power and authority of the Board” to
    review, evaluate, negotiate, recommend, or reject any proposed transaction or
    strategic alternatives.78 The Board resolution establishing the Special Committee
    73
    JX0315.0001.
    74
    Tr. 526-27 (Aquila).
    75
    PTO ¶ 285.
    76
    
    Id. ¶¶ 286-87.
    The written consent establishing the Special Committee is dated July 23,
    2015 (see JX0359), but it is stipulated that it was formed on July 20, 2015. PTO ¶ 287.
    77
    PTO ¶ 287; Tr. 754-56, 771-772 (Yarbrough).
    78
    JX0359.0002.
    16
    further provided that “the Board shall not recommend a Possible Transaction or
    alternative thereto for approval by the Company’s stockholders or otherwise approve
    a Possible Transaction or alternative thereto without a prior favorable
    recommendation of such Possible Transaction or alternative thereto by the Special
    Committee.”79
    H.    The Special Committee Begins its Work
    On July 30, 2015, the Special Committee met with its legal advisors, Sullivan
    & Cromwell LLP and Richards, Layton & Finger P.A., and financial advisor
    Centerview Partners LLC (“Centerview”).80 Rothschild remained active in the sales
    process and was formally engaged to represent the Company,81 but, in reality, it also
    continued to represent Aquila personally.82
    At its July 30 meeting, the Special Committee approved a list of potential
    buyers to approach, including six strategic companies that were selected based on
    their business initiatives and stated future plans, and six financial sponsors
    (including Vista) that were selected based on their experience and interest in the
    technology and information services industry and their capability to execute and
    79
    
    Id. 80 Tr.
    776-78 (Yarbrough); PTO ¶ 289.
    81
    JX0625; JX0673.0020; JX1161.0001. Both Centerview and Rothschild each were paid
    approximately $25 million in advisory fees. JX0673.0020.
    82
    Tr. 568 (Aquila); JX1170.
    17
    finance a transaction of this size.83 The Special Committee also distributed to
    management a short document that Sullivan & Cromwell prepared concerning senior
    management contacts with prospective bidders, which, aptly for a company focused
    on the automotive industry, was referred to as the “Rules of the Road.”84 The
    document stated, among other things, that “senior management must treat potential
    Bidders equally” and refrain from “any discussions with any Bidder representatives
    relating to any future compensation, retention or investment arrangements, without
    approval by the independent directors.”85
    Between July 30 and August 4, 2015, Centerview contacted 11 private equity
    firms and 6 potential strategic bidders, including Google and Yahoo!, the two that
    Special Committee Chair Yarbrough believed were most likely to bid.86 Aquila
    already had “tested the waters” with some of the private equity firms that the Special
    Committee contacted. All six strategic firms contacted declined to explore a
    transaction involving Solera.87 At this time, the Special Committee did not contact
    IHS Inc. (“IHS”), another possible strategic acquirer, because IHS was one of
    83
    PTO ¶ 289.
    84
    Tr. 782-83 (Yarbrough); JX0380.0003-05.
    85
    JX0380.0005.
    86
    PTO ¶ 295; Tr. 870-71 (Yarbrough).
    87
    PTO ¶ 298.
    18
    Solera’s key competitors and the Special Committee had “a low level of confidence”
    in IHS’s ability to finance a transaction.88
    From time to time, Aquila, through Rothschild and his legal counsel, Kirkland
    & Ellis LLP,89 apprised the Special Committee on his thoughts about the sales
    process. On July 30, 2015, Baron told the Special Committee’s legal and financial
    advisors in an email that Aquila did not want IHS included in the sales process,
    stating “fishing expedition, too competitive, need 50% stock . . .”90
    On August 3, 2015, Aquila’s counsel sent the Special Committee a proposed
    “Management Retention Program.”91 This proposal stated that “an incremental $75
    million cash retention pool” should be created to align management and shareholder
    incentives, and to “enhance impartiality of management among all potential
    buyers.”92 The proposal warned that under the current compensation plan, “the
    program inadequately aligns management’s interests with those of stockholders and
    exposes the Company to risks of losing key managers through closing” of a
    transaction.93 Solera did not implement this proposed “Management Retention
    88
    Tr. 780-82 (Yarbrough).
    89
    JX1170.
    90
    JX0378.0001.
    91
    Tr. 546 (Aquila); JX0402.
    92
    JX0402.0003, 07.
    93
    JX0402.0003.
    19
    Program,” but the Compensation Committee did award Aquila a $15 million bonus
    in August 2015.94
    I.     The Special Committee Solicits First-Round Bids and News of the
    Sales Process Leaks
    By August 11, 2015, Yarbrough viewed “the state of the world to be one
    where if there’s going to be a deal, it’s going to be with a private equity firm.”95 On
    August 10, 2015, at the direction of the Special Committee, Centerview sent a letter
    to the five remaining parties inviting them to submit first-round bids by August 17,
    2015.96 These parties had signed confidentiality agreements and were provided
    Board-approved five-year projections for the Company, which were based on
    projections created in the normal course of business but then modified in connection
    with the sales process (the “Hybrid Case Projections”).97 Before the August 17 bid
    deadline, Baron spoke to certain potential bidders directly without involving
    Centerview.98
    94
    Tr. 558, 589 (Aquila).
    95
    
    Id. at 854
    (Yarbrough).
    96
    PTO ¶ 299; JX0756.0044.
    97
    PTO ¶ 388; JX0445.0005.
    98
    See JX0467.0001 (Silver Lake); JX0456.0001 (Pamplona).
    20
    By August 17, 2015, two potential bidders had dropped out of the sales
    process, believing “that they would not be able to submit competitive bids.” 99 The
    remaining three financial sponsors provided indications of interest: Vista offered
    $63 per share, Thoma Bravo offered $60 per share, and Pamplona offered $60-$62
    per share.100 Each made clear that they wanted Aquila’s participation in the deal.101
    On August 19, 2015, news of the sales process leaked when Bloomberg
    reported that Solera was “exploring a sale that has attracted interest from private
    equity firms.”102 The next day, the Company issued a press release announcing that
    it had formed the Special Committee and that it was contemplating a sale.103 Also
    on August 20, the Financial Times reported that Vista was “considering a bid of $63
    per share” and that Thoma Bravo and Pamplona were “considering separate bids for
    $62 per share.”104
    In a further development on August 20, Advent International Corporation, a
    private equity firm, reached out to Centerview and Rothschild separately to express
    99
    JX0465.0001.
    100
    PTO ¶ 302.
    101
    JX0340.0003; JX0464.0005, 08.
    102
    PTO ¶ 305.
    103
    
    Id. ¶ 306.
    104
    JX0499.0002.
    21
    interest in the Company.105 Centerview confirmed to Baron that it planned to ignore
    the inquiry,106 about which the members of the Special Committee were never
    informed.107 The Special Committee also was not made aware of interest that
    Providence Equity Partners, L.L.C.,108 another private equity firm, expressed to
    Centerview on August 26.109 When Centerview made Baron aware of this inquiry,
    he responded: “Too late obv[iously] but Tony not a fan . . .”110 Neither Advent nor
    Providence gave any indication as to the price they would be willing to pay for Solera
    or the amount of time they would need to get up to speed.111
    During the August 22-23, 2015 weekend, Smith traveled to Aquila’s ranch en
    route to his own ranch in Colorado.112 Before the meeting, Smith’s team at Vista
    researched the size of the option pools that Vista had offered management in its
    “recent take privates” so that Smith would “know the comps before his meeting with
    [T]ony.”113 Aquila did not have authorization from the Special Committee to discuss
    105
    JX0497.0001-02 (August 20, 2015 email from Advent to Centerview); JX0517.0001
    (August 21, 2015 email referencing Advent call to UK head of Rothschild).
    106
    JX0497.0001.
    107
    Tr. 844-45 (Yarbrough).
    108
    
    Id. at 845-46
    (Yarbrough).
    109
    JX0556.0001.
    110
    
    Id. 111 JX0497;
    JX0556.
    112
    Tr. 597-98 (Aquila); JX0523; JX0525.
    113
    JX0525.0002.
    22
    his post-transaction compensation at this time.114 Shortly after the meeting, Vista
    began to model a 9% option pool with a 1% long-term incentive plan (LTIP), up
    from the 5% option pool with a 1% LTIP that Vista had modeled before Aquila’s
    meeting with Smith.115
    J.       IHS Expresses Interest in a Potential Transaction
    On August 21, 2015, IHS contacted Centerview to express its interest in a
    potential acquisition of Solera at an unspecified valuation and financing structure.116
    By August 23, IHS suggested that it would be able to submit a bid in excess of $63
    per share, and it indicated that it could complete due diligence and execute definitive
    transaction documents within ten calendar days despite not yet having received non-
    public information.117 The parties entered into a confidentiality agreement on
    August 24.118
    On August 26, 2015, senior representatives of IHS, including its CFO,
    attended a meeting with the Company’s management, before which Aquila had a
    one-on-one conversation with IHS’s CFO for 90 minutes.119 Centerview requested
    114
    Tr. 833 (Yarbrough).
    115
    JX0525.0001; JX0541.0001.
    116
    PTO ¶ 307.
    117
    
    Id. ¶ 308.
    118
    
    Id. ¶ 309.
    119
    
    Id. ¶ 312.
                                                23
    numerous times that IHS’s CEO Jerre Stead attend the management meeting, but he
    declined even though the acquisition would have been the largest in IHS’s history.120
    By August 27, Solera had provided IHS with non-public Company information,
    including the Hybrid Case Projections.121
    On September 1, IHS submitted a bid of $55-$58 per share, comprised of 75%
    cash and 25% stock, and included “highly confident” letters from financing
    sources.122        On September 2, Aquila travelled separately to meet with Stead
    personally, who commented that IHS was “looking at another big deal as well.”123
    The next day, IHS submitted a revised bid of $60 per share, but did not specify the
    mix of consideration and did not include any indication of financing
    commitments.124 IHS said it could complete diligence “within a matter of days.”125
    120
    
    Id. ¶ 312;
    Tr. 441 (Aquila), 793 (Yarbrough).
    121
    PTO ¶ 313.
    122
    
    Id. ¶ 317.
    123
    Tr. 442-44 (Aquila).
    124
    PTO ¶ 321.
    125
    JX0611.0002.
    24
    K.       The Special Committee Negotiates with Potential Buyers
    On September 4, 2015, Vista and Thoma Bravo submitted revised bids.126
    Pamplona had dropped out of the sales process by this point,127 and the Special
    Committee felt like it was “moving backwards” in its negotiations with IHS.128
    Both of the active bidders lowered their offers. Thoma Bravo lowered its bid
    to $56 per share, attributing the drop to “challenges in availability and terms of
    financing (both debt and equity) due in part to turbulence in global financial
    markets.”129 Vista lowered its bid to $55 per share, but subsequently indicated that
    it could increase its price to $56 per share.130 Vista explained that it dropped its bid
    because of changes to Solera’s balance sheet, increased financing costs, and a
    decline in Vista’s forecasted EBITDA for Solera.131 Unbeknownst to Solera, one of
    the reasons Vista lowered its bid is that it had made a spreadsheet error in its financial
    model before submitting its first-round bid, resulting in the model overstating
    Solera’s future equity value by approximately $1.9 billion.132 If this error had been
    126
    PTO ¶¶ 322, 324.
    127
    
    Id. ¶ 311.
    128
    Tr. 796-97 (Yarbrough).
    129
    PTO ¶¶ 322-23.
    130
    
    Id. ¶ 324.
    131
    JX0620.0001-02; JX0626.0001.
    132
    Tr. 934-35, 964-67 (Sowul). Petitioners question the veracity of this explanation, but I
    found Sowul’s testimony on the point to be credible and one of petitioners’ own experts
    confirmed the spreadsheet error. 
    Id. at 301-04
    (Buckberg).
    25
    noticed and corrected, Vista’s first-round bid would have been closer to $55 per
    share, rather than $63 per share.133
    On September 5, 2015, Aquila signaled that he was willing to roll over $15
    million of his Solera shares in a transaction with any bidder.134 That day, the Special
    Committee met135 and decided to press for more from the bidders, proposing to Vista
    that it either raise its price to $58 per share, or agree to a go-shop and reduced
    termination fee to enable Solera to continue discussions with IHS.136 Vista agreed
    to the go-shop and the termination fee reduction on September 7, but also told
    Centerview that day that one of its anticipated sources of equity financing had
    withdrawn its commitment and that it would need additional time to obtain
    replacement financing to support its bid.137
    On September 8, Vista lowered its bid to $53 per share.138 Vista told Solera
    that its bid would expire at midnight, and that “[a]fter midnight, we will not be
    spending any more time on” Solera.139 The Special Committee rejected Vista’s bid
    133
    
    Id. at 934-35
    (Sowul).
    134
    PTO ¶¶ 382-84; Tr. 589 (Aquila); JX0623.
    135
    JX0628.
    136
    PTO ¶ 325.
    137
    
    Id. ¶¶ 329-31.
    138
    
    Id. ¶ 332.
    139
    JX0638.0001.
    26
    as inadequate that same day,140 and decided “to let the process play out.”141 The
    Special Committee set September 11, 2015 as a deadline for Vista and Thoma Bravo
    to make final bids.142 On September 9, Bloomberg reported that Solera had received
    bids from Vista and Thoma Bravo, and that the Company was “nearing a deal to sell
    itself for about $53 a share.”143
    When September 11 arrived, Thoma Bravo offered $54 per share, expiring at
    midnight and contingent on Solera “shutting off dividends” and reducing advisory
    fees.144 The Special Committee said “no.”145 The press again reported in real time,
    with Reuters writing that Vista and Thoma Bravo had “made offers that failed to
    meet Solera’s valuation expectations,” and that Solera was “trying to sell itself to
    another company”—IHS—“rather than an investment firm.”146
    The next morning, on September 12, Vista submitted an all-cash, fully
    financed revised bid of $55.85 per share that also included the go-shop and
    termination fee provisions the Special Committee had requested.147 The Special
    140
    PTO ¶ 334.
    141
    Tr. 969-70 (Sowul).
    142
    
    Id. at 806
    (Yarbrough).
    143
    JX0644.0001.
    144
    PTO ¶ 338; Tr. 806 (Yarbrough).
    145
    Tr. 807 (Yarbrough).
    146
    JX0651.0001.
    147
    PTO ¶ 339; JX0756.0052; Tr. 807-08 (Yarbrough).
    27
    Committee tried to push Vista up to $56 per share, but Vista refused, saying $55.85
    was its best and final offer.148 Centerview opined that $55.85 per share was fair,
    from a financial point of view, to Solera stockholders.149 Later in the day on
    September 12, the Special Committee accepted Vista’s offer after receiving
    Centerview’s fairness opinion, and the Board approved the transaction.150 On
    September 13, the Company and Vista entered into a definitive merger agreement
    (the “Merger Agreement”).151
    L.       The Go-Shop Period Expires and the Merger Closes
    On September 13, 2015, Solera announced the proposed Merger.152 The press
    release stated that the purchase price valued Solera at approximately $6.5 billion,
    including net debt, “represent[ing] an unaffected premium of 53% over Solera’s
    closing share price of $36.39 on August 3, 2015.”153
    In advance of the press release, Baron sent a celebratory email to his
    colleagues, in which he noted “we were the architects with the CEO from the
    beginning as to how to engineer the process from start to finish.”154 The next
    148
    PTO ¶ 339.
    149
    
    Id. ¶ 341;
    Tr. 807-08 (Yarbrough); JX0661.0001-04.
    150
    
    Id. ¶¶ 346-47.
    151
    
    Id. ¶ 348.
    152
    JX0681.
    153
    JX0681.0001.
    154
    JX0670.0002.
    28
    morning, an internal email of the Fir Tree petitioners praised the transaction as
    yielding a “Good price!”155
    The Merger Agreement provided for a 28-day go-shop period during which
    the termination fee would be 1% of the equity value for any offer made by IHS, a
    reduction from the 3% termination fee applicable to any other potential buyer.156
    The Special Committee reached out to IHS the day after signing the Merger
    Agreement and gave IHS nearly full access to the approximately 12,000-document
    data room that the private equity firms had been given access to during the pre-
    signing sales process.157
    On September 29, 2015, with two weeks left in the go-shop, IHS informed
    Solera that it would not pursue an acquisition of the Company. IHS noted that it
    “was appreciative of the go-shop provisions negotiated in the merger agreement . . .
    and the fact that [Solera] had provided equal access to information in order for IHS
    to consider a bid.”158 On October 5, 2015, Solera issued its preliminary proxy
    155
    JX0683.0001.
    156
    PTO ¶ 350.
    157
    
    Id. ¶ 351;
    Tr. 811 (Yarbrough). Solera withheld six documents. Four of the six
    documents concerned Digital Garage, a strategically sensitive new smartphone application,
    and the other two concerned personnel matters. Tr. 811 (Yarbrough); PTO ¶ 139-44.
    158
    PTO ¶ 354.
    29
    statement, which disclosed a summary of the Hybrid Case Projections.159 The go-
    shop expired on October 11, without Solera receiving any alternative proposals.160
    On October 15, 2015, Vista sent Aquila a proposed compensation package,
    offering Aquila the opportunity to obtain up to 6% of Solera’s fully-diluted equity.161
    This amount was later revised up, with Vista offering Aquila up to 10% of the fully-
    diluted equity. Under the revised plan, Aquila would invest $45 million in the deal—
    $15 million worth of his shares of Solera and $30 million borrowed from Vista.162
    Vista’s proposal positioned Aquila to earn up to $969.6 million over a seven-year
    period if Vista achieved a four-times cash-on-cash return.163
    On October 30, 2015, Solera issued its definitive proxy statement concerning
    the proposed Merger, which also included a summary of the Hybrid Case
    Projections.164 On December 8, Solera’s stockholders voted to approve the Merger.
    Of the Company’s outstanding shares, approximately 65.4% voted in favor,
    approximately 10.9% voted against, and approximately 3.4% abstained.165 The
    159
    
    Id. ¶ 355.
    160
    
    Id. ¶ 356.
    161
    JX0744.0001, 03; Tr. 611-614 (Aquila).
    162
    PTO ¶¶ 382-387; JX0760.0004.
    163
    JX0760.0004, 09-10.
    164
    PTO ¶ 5; JX0756.0069.
    165
    PTO ¶¶ 6-7.
    30
    Merger closed on March 3, 2016.166 The next day, Aquila signed a new employment
    agreement with Solera.167
    II.       PROCEDURAL POSTURE
    On March 7 and March 10, 2016, petitioners filed their petitions for appraisal.
    The court consolidated the petitions on March 30, 2016. A five-day trial was held
    in June 2017, and post-trial argument was held on December 4, 2017.
    At the conclusion of the post-trial argument, the court asked the parties to
    confer to see if they could agree on an expert the court might appoint to opine on a
    significant issue of disagreement concerning the methods the parties’ experts used
    to determine the terminal period investment rate in their discounted cash flow
    analyses. On December 19, 2017, the parties advised the court that they were unable
    to reach agreement on a suggested expert and each submitted two candidates for the
    court’s consideration.
    On February 22, 2018, Solera filed a motion requesting the opportunity to
    submit supplemental briefs to address the implications of certain appraisal decisions
    issued after the post-trial argument. The court granted this motion on February 26,
    2018, noting in its order that it had “made no decision about whether to proceed with
    166
    
    Id. ¶ 1.
    167
    JX0855.0001.
    31
    an independent expert” and would “revisit the issue after reviewing the supplemental
    submissions.”168 Supplemental briefing was completed on April 6, 2018.169
    III.     ANALYSIS
    A.       Legal Standard
    Petitioners request appraisal of their shares of Solera under 
    8 Del. C
    . § 262.
    “An action seeking appraisal is intended to provide shareholders who dissent from a
    merger, on the basis of the inadequacy of the offering price, with a judicial
    determination of the fair value of their shares.”170 Respondent has not disputed
    petitioners’ eligibility for an appraisal of their shares.
    In an appraisal action, the court has a statutory mandate to:
    [D]etermine the fair value of the shares exclusive of any element of
    value arising from the accomplishment or expectation of the merger or
    consolidation, together with interest, if any, to be paid upon the amount
    determined to be the fair value. In determining such fair value, the
    Court shall take into account all relevant factors.171
    Appraisal excludes any value resulting from the merger, including synergies that
    may arise,172 because “[t]he basic concept of value under the appraisal statute is that
    the stockholder is entitled to be paid for that which has been taken from him, viz.,
    168
    Dkt. 122.
    169
    Dkt. 125.
    170
    Cavalier Oil Corp. v. Harnett, 
    564 A.2d 1137
    , 1142 (Del. 1989) (citation omitted).
    171
    
    8 Del. C
    . § 262(h).
    172
    See M.P.M. Enters., Inc. v. Gilbert, 
    731 A.2d 790
    , 797 (Del. 1999).
    32
    his proportionate interest in a going concern.”173 In valuing a company as a “going
    concern” at the time of a merger, the court must take into consideration the
    “operative reality”174 of the company, viewing the company as “occupying a
    particular market position in the light of future prospects.”175              A dissenting
    stockholder is then entitled to his proportionate interest in the going concern.176
    In using “all relevant factors” to determine fair value, the court has significant
    discretion to use the valuation methods it deems appropriate, including the parties’
    proposed valuation frameworks, or one of the court’s own fashioning.177 This court
    has relied on a number of different approaches to determine fair value, including
    comparable company and precedent transaction analyses, a discounted cash flow
    model, and the merger price.178 “This Court may not adopt at the outset an ‘either-
    or’ approach, thereby accepting uncritically the valuation of one party, as it is the
    173
    Tri-Cont’l Corp. v. Battye, 
    74 A.2d 71
    , 72 (Del. 1950).
    174
    M.G. Bancorporation, Inc. v. Le Beau, 
    737 A.2d 513
    , 525 (Del. 1999).
    175
    Matter of Shell Oil Co., 
    607 A.2d 1213
    , 1218 (Del. 1992).
    176
    Cavalier 
    Oil, 564 A.2d at 1144
    .
    177
    In re Appraisal of Ancestry.com, Inc., 
    2015 WL 399726
    , at *15 (Del. Ch. Jan. 30, 2015)
    (citing Glob. GT LP v. Golden Telecom, Inc. 
    11 A.3d 214
    , 218 (Del. 2010)).
    178
    See Laidler v. Hesco Bastion Envtl., Inc., 
    2014 WL 1877536
    , at *6 (Del. Ch. May 12,
    2014) (compiling authorities); see also In re Lane v. Cancer Treatment Ctrs. of Am., Inc.,
    
    1994 WL 263558
    , at *2 (Del. Ch. May 25, 1994) (“[R]elevant factors to be considered
    include ‘assets, market value, earnings, future prospects, and any other elements that affect
    the intrinsic or inherent value of a company’s stock.’”) (quoting Weinberger, at 711).
    33
    Court’s duty to determine the core issue of fair value on the appraisal date.” 179 “In
    an appraisal proceeding, the burden to establish fair value by a preponderance of the
    evidence rests on both the petitioner and the respondent.”180
    B.     DFC, Dell, and Recent Court of Chancery Appraisal Decisions
    Over the past year, the Delaware Supreme Court has issued two decisions
    providing important guidance for the Court of Chancery in appraisal proceedings:
    DFC Global Corporation v. Muirfield Value Partners, L.P.181 and Dell, Inc. v.
    Magnetar Global Event Driven Master Fund Ltd.182 Given their importance, a brief
    discussion of each case is appropriate at the outset.
    In DFC, petitioners sought appraisal of shares they held in a publicly traded
    payday lending firm, DFC, that was purchased by a private equity firm.183 This court
    attempted to determine the fair value of DFC’s shares by equally weighting three
    measures of value: a discounted cash flow model, a comparable company analysis,
    and the transaction price.184 The court gave equal weight to these three measures of
    179
    In re Appraisal of Metromedia Int’l Gp., Inc., 
    971 A.2d 893
    , 899-900 (Del. Ch. 2009)
    (citation omitted).
    180
    Laidler, 
    2014 WL 1877536
    , at *6 (citing M.G. Bancorporation., Inc., v. Le 
    Beau, 737 A.2d at 520
    ).
    181
    
    172 A.3d 346
    (Del. 2017).
    182
    
    177 A.3d 1
    (Del. 2017).
    183
    
    DFC, 172 A.3d at 348
    .
    184
    In re Appraisal of DFC Glob. Corp., 
    2016 WL 3753123
    , at *1 (Del. Ch. July 8, 2016),
    rev’d, DFC, 
    172 A.3d 346
    .
    34
    value because it found that each similarly suffered from limitations arising from the
    tumultuous regulatory environment that was swirling around DFC during the period
    leading up to its sale.185 The court’s analysis resulted in a fair value of DFC at
    approximately 8% above the transaction price.186
    The Delaware Supreme Court reversed and remanded to the trial court.187
    Based on its own review of the trial record, the Supreme Court held that the Court
    of Chancery’s decision to afford only one-third weight to the transaction price was
    “not rationally supported by the record,”188 explaining:
    Although there is no presumption in favor of the deal price . . .
    economic principles suggest that the best evidence of fair value was the
    deal price, as it resulted from an open process, informed by robust
    public information, and easy access to deeper, non-public information,
    in which many parties with an incentive to make a profit had a chance
    to bid.189
    185
    See 
    id. at *21
    (“Each of these valuation methods suffers from different limitations that
    arise out of the same source: the tumultuous environment in the time period leading up to
    DFC’s sale. As described above, at the time of its sale, DFC was navigating turbulent
    regulatory waters that imposed considerable uncertainty on the company’s future
    profitability, even its viability. Some of its competitors faced similar challenges. The
    potential outcome could have been dire, leaving DFC unable to operate its fundamental
    businesses, or could have been very positive, leaving DFC’s competitors crippled and
    allowing DFC to gain market dominance. Importantly, DFC was unable to chart its own
    course; its fate rested largely in the hands of the multiple regulatory bodies that governed
    it. Even by the time the transaction closed in June 2014, DFC’s regulatory circumstances
    were still fluid.”).
    186
    
    DFC, 172 A.3d at 360-61
    .
    187
    
    Id. at 351.
    188
    
    Id. at 349.
    189
    
    Id. 35 The
    Supreme Court further explained that the purpose of appraisal “is not to make
    sure that the petitioners get the highest conceivable value,” but rather “to make sure
    that they receive fair compensation for their shares in the sense that it reflects what
    they deserve to receive based on what would fairly be given to them in an arm’s-
    length transaction.”190
    According to the Supreme Court, “[m]arket prices are typically viewed
    superior to other valuation techniques because, unlike, e.g., a single person’s
    discounted cash flow model, the market price should distill the collective judgment
    of the many based on all the publicly available information about a given company
    and the value of its shares.”191 The “collective judgment of the many” may include
    that of “equity analysts, equity buyers, debt analysts, [and] debt providers.” 192 The
    Supreme Court cautioned that “[t]his, of course, is not to say that the market price is
    always right, but that one should have little confidence she can be the special one
    able to outwit the larger universe of equally avid capitalists with an incentive to reap
    rewards by buying the asset if it is too cheaply priced.”193
    Several months after deciding DFC, the Supreme Court reiterated the same
    appraisal thesis in Dell, where the trial court had reached a determination of fair
    190
    
    Id. at 370-71.
    191
    
    Id. at 369-70.
    192
    
    Id. at 373.
    193
    
    Id. at 367.
                                              36
    value at approximately 28% above the transaction price.194 In Dell, the Supreme
    Court found that the Court of Chancery erred by relying completely on a discounted
    cash flow analysis and affording zero weight to market data, i.e., the stock price and
    the deal price, because “the evidence suggests that the market for Dell’s shares was
    actually efficient and, therefore, likely a possible proxy for fair value.”195 With
    respect to the company’s stock price, the Supreme Court explained:
    Dell’s stock traded on the NASDAQ under the ticker symbol DELL.
    The Company’s market capitalization of more than $20 billion ranked
    it in the top third of the S&P 500. Dell had a deep public float and was
    actively traded as more than 5% of Dell’s shares were traded each week.
    The stock had a bid-ask spread of approximately 0.08%. It was also
    widely covered by equity analysts, and its share price quickly reflected
    the market’s view on breaking developments.196
    The Supreme Court thus held that “the record does not adequately support the Court
    of Chancery’s conclusion that the market for Dell’s stock was inefficient and that a
    valuation gap in the Company’s market trading price existed in advance of the
    lengthy market check, an error that contributed to the trial court’s decision to
    disregard the deal price.”197
    194
    In re Appraisal of Dell Inc., 
    2016 WL 3186538
    , at *1, 18 (Del. Ch. May 31, 2016),
    rev’d, Dell, 
    177 A.3d 1
    .
    195
    
    Dell, 117 A.3d at 6
    .
    196
    
    Id. at 7.
    197
    
    Id. at 27.
                                                37
    With respect to the deal price, the Supreme Court said that “it is clear that
    Dell’s sale process bore many of the same objective indicia of reliability” as the one
    in DFC, which “included that ‘every logical buyer’ was canvassed, and all but the
    buyer refused to pursue the company when given the opportunity; concerns about
    the company’s long-term viability (and its long-term debt’s placement on negative
    credit watch) prevented lenders from extending debt; and the company repeatedly
    underperformed its projections.”198 Given leaks in the press that Dell was exploring
    a sale, moreover, the world was put on notice of the possibility of a transaction so
    that “any interested parties would have approached the Company before the go-shop
    if serious about pursuing a deal.”199
    Dell’s bankers canvassed the interest of 67 parties, including 20 possible
    strategic acquirers during the go-shop, and the go-shop’s overall design was
    relatively open and flexible.200 The special committee had the power to say “no,”
    and it convinced the eventual buyer to raise its bid six times.201 The Supreme Court
    thus found that “[n]othing in the record suggests that increased competition would
    have produced a better result. [The financial advisor] also reasoned that any other
    198
    
    Id. at 28
    (citing 
    DFC, 172 A.3d at 374-77
    ); see also 
    id. (“[The financial
    advisor] did not
    initially solicit the interest of strategic bidders because its analysis suggested none was
    likely to make an offer.”).
    199
    
    Id. 200 Id.
    at 29.
    201
    
    Id. at 28
    .
    38
    financial sponsor would have bid in the same ballpark as [the buyer].”202
    Significantly, the Court did not view a dearth of strategic buyer interest as negatively
    impacting the reliability of the deal price, explaining:
    Fair value entails at minimum a price some buyer is willing to pay—
    not a price at which no class of buyers in the market would pay. The
    Court of Chancery ignored an important reality: if a company is one
    that no strategic buyer is interested in buying, it does not suggest a
    higher value, but a lower one.203
    In sum, the Supreme Court held that “[o]verall, the weight of evidence shows
    that Dell’s deal price has heavy, if not overriding, probative value.”204                    It
    summarized its decision as follows:
    In so holding, we are not saying that the market is always the best
    indicator of value, or that it should always be granted some weight. We
    only note that, when the evidence of market efficiency, fair play, low
    barriers to entry, outreach to all logical buyers, and the chance for any
    topping bidder to have the support of Mr. Dell’s own votes is so
    compelling, then failure to give the resulting price heavy weight
    because the trial judge believes there was mispricing missed by all the
    Dell stockholders, analysts, and potential buyers abuses even the wide
    discretion afforded the Court of Chancery in these difficult cases.205
    202
    
    Id. 203 Id.
    at 29 (citation omitted).
    204
    
    Id. at 30.
    See also 
    id. at 23
    (“In fact, the record as distilled by the trial court suggests
    that the deal price deserved heavy, if not dispositive, weight.”).
    205
    
    Id. at 35.
                                                   39
    Shortly after Dell was decided, the Court of Chancery rendered appraisal
    decisions in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.206 and In
    re Appraisal of AOL Inc.207
    In Aruba, the court observed that the Supreme Court’s decisions in DFC and
    Dell “endorse using the deal price in a third-party, arm’s-length transaction as
    evidence of fair value” and “caution against relying on discounted cash flow
    analyses prepared by adversarial experts when reliable market indicators are
    available.”208 The court further observed that DFC and Dell “recognize that a deal
    price may include synergies, and they endorse deriving an indication of fair value
    by deducting synergies from the deal price.”209 Rather than hold that the deal price
    less synergies represented fair value, however, the Aruba court determined that fair
    value was “the unaffected market price” of petitioners’ shares, which was more than
    30% below the transaction price.210 The court identified “two major shortcomings”
    of its “deal-price-less-synergies figure” that supported this conclusion and explained
    its rationale for using the “unaffected market price” as follows:
    206
    
    2018 WL 922139
    (Del. Ch. Feb. 15, 2018), reargument denied, 
    2018 WL 2315943
    (Del.
    Ch. May 21, 2018).
    207
    
    2018 WL 1037450
    (Del. Ch. Feb. 23, 2018).
    208
    
    2018 WL 922139
    at *1-2 (citations omitted).
    209
    
    Id. at *2
    (citation omitted).
    210
    
    Id. at *1,
    4.
    40
    First, my deal-price-less-synergies figure is likely tainted by human
    error. Estimating synergies requires exercises of human judgment
    analogous to those involved in crafting a discounted cash flow
    valuation. The Delaware Supreme Court’s preference for market
    indications over discounted cash flow valuations counsels in favor of
    preferring market indications over the similarly judgment-laden
    exercise of backing out synergies.
    Second, my deal-price-less-synergies figure continues to incorporate an
    element of value derived from the merger itself: the value that the
    acquirer creates by reducing agency costs. A buyer’s willingness to pay
    a premium over the market price of a widely held firm reflects not only
    the value of anticipated synergies but also the value created by reducing
    agency costs. The petitioners are not entitled to share in either element
    of value, because both arise from the accomplishment or expectation of
    the merger. The synergy deduction compensates for the one element of
    value arising from the merger, but a further downward adjustment
    would be necessary to address the other.
    Fortunately for a trial judge, once Delaware law has embraced a
    traditional formulation of the efficient capital markets hypothesis, the
    unaffected market price provides a direct route to the same endpoint, at
    least for a company that is widely traded and lacks a controlling
    stockholder. Adjusting down from the deal price reaches, indirectly,
    the result that the market price already provides.211
    In AOL, the court similarly construed DFC and Dell to mean that where
    “transaction price represents an unhindered, informed, and competitive market
    valuation, the trial judge must give particular and serious consideration to transaction
    price as evidence of fair value” and that where “a transaction price is used to
    determine fair value, synergies transferred to the sellers must be deducted.”212 In
    211
    
    Id. at *2
    -4 (internal citations, quotations, and alterations omitted).
    212
    
    2018 WL 1037450
    , at *1.
    41
    doing so, the court coined the phrase “Dell Compliant” to mean a transaction “where
    (i) information was sufficiently disseminated to potential bidders, so that (ii) an
    informed sale could take place, (iii) without undue impediments imposed by the deal
    structure itself.”213 The court found that the sales process did not satisfy this standard
    and ultimately determined the fair value of petitioners’ shares based on its own
    discounted cash flow analysis ($48.70 per share), which was about 2.6% less than
    the deal price ($50 per share).214
    C.       The Parties’ Contentions
    Petitioners contend that the fair value of their shares is $84.65 per share—
    approximately 51.6% over the deal price. Their sole support for this valuation is a
    discounted cash flow model prepared by their expert, Bradford Cornell, Visiting
    Professor of Financial Economics at the California Institute of Technology.215
    Cornell also performed a multiples-based comparable company analysis “as a
    reasonableness check” but gave it no weight in his valuation.216
    213
    
    Id. at *8.
    214
    
    Id. at *2
    1. Just last week, the Court of Chancery similarly found in another case that
    flaws in a sales process leading to a merger undermined the reliability of the merger price
    as an indicator of fair value. Blueblade Capital Opportunities LLC v. Norcraft Cos., Inc.,
    
    2018 WL 3602940
    , at *1-2 (Del. Ch. July 27, 2018).
    215
    JX0898.0094-95, 200.
    216
    JX0898.0098.
    42
    Respondent’s expert was Glenn Hubbard, the Dean and Russell L. Carson
    Professor in Finance and Economics at the Graduate School of Business of Columbia
    University, as well as Professor of Economics at Columbia University.                He
    concluded that the “best evidence of Solera’s value is the market-generated Merger
    price [$55.85], adjusted for synergies [$1.90] to $53.95.”217 Hubbard also conducted
    a valuation based on a discounted cash flow model, which resulted in a valuation of
    $53.15 per share, but found the methodology to be less reliable in this instance.218
    Hubbard further considered, as a “check,” Solera’s historical valuation multiples,
    analysts’ stock price targets, and valuation multiples from comparable companies
    and precedent transactions.219
    This sharp divide of $31.50 per share between the experts’ DCF models is the
    result of a number of disagreements regarding the proper inputs and methods to use
    in the analysis. The most significant disagreements are explained later.
    Throughout trial and post-trial briefing, respondent consistently maintained
    that the best evidence of Solera’s value at the time of the Merger was the deal price
    minus synergies. Seizing on the Aruba decision, respondent changed course during
    217
    Resp’t’s Post-Trial Opening Br. 1 (Dkt. 106); see also JX0894.0125-26.
    218
    JX0894.0126.
    219
    
    Id. 43 supplemental
    briefing, arguing that “[i]n light of recent cases, the best evidence of
    Solera’s fair value is its unaffected stock price of $36.39 per share.”220
    D.      Determination of Solera’s Fair Value
    I now turn to my own independent determination of the fair value of Solera’s
    shares with the guidance from DFC and Dell in mind. Those decisions teach that
    deal price is “the best evidence of fair value”221 when there was an “open process,”222
    meaning that the process is characterized by “objective indicia of reliability.” 223
    Such “indicia” include but, consistent with the mandate of the appraisal statute to
    consider “all relevant factors,”224 are not limited to:
     “[R]obust public information,”225 comprised of the stock price of a company
    with “a deep base of public shareholders, and highly active trading,”226 and
    220
    Resp’t’s Suppl. Post-Trial Br. 5 (Dkt. 123).
    221
    
    DFC, 172 A.3d at 349
    .
    222
    
    Id. 223 Dell,
    177 A.3d at 28.
    224
    
    8 Del. C
    . § 262(h) (“In determining such fair value, the Court shall take into account all
    relevant factors.”); see also 
    DFC, 172 A.3d at 364
    (affirming Golden Telecom and restating
    that Ҥ 262(h) gives broad discretion to the Court of Chancery to determine the fair value
    of the company’s shares, considering ‘all relevant factors’”).
    225
    
    DFC, 172 A.3d at 349
    .
    226
    
    Id. at 373.
                                                   44
    the views of “equity analysts, equity buyers, debt analysts, debt providers and
    others.”227
     “[E]asy access to deeper, non-public information,”228 where there is no
    discrimination between potential buyers and cooperation from management
    helps address any information asymmetries between potential buyers.229
     “[M]any parties with an incentive to make a profit had a chance to bid,”230
    meaning that there was a “robust market check”231 with “outreach to all logical
    buyers”232 and a go-shop characterized by “low barriers to entry”233 such that
    there is a realistic possibility of a topping bid.
     A special committee, “composed of independent, experienced directors and
    armed with that power to say ‘no,’”234 which is advised by competent legal
    and financial advisors.
    227
    Id.
    228
    
    Id. at 349.
    229
    
    Dell, 177 A.3d at 32-34
    .
    230
    
    DFC, 172 A.3d at 349
    .
    231
    
    Id. at 366.
    232
    
    Dell, 177 A.3d at 35
    .
    233
    Id.
    234
    
    Id. at 28
    .
    45
     “[N]o conflicts related to the transaction,”235 with the company purchased by
    a third party in an arm’s length sale236 and “no hint of self-interest.”237
    If the process was open, then “the deal price deserve[s] heavy, if not
    dispositive, weight.”238 This is not to say that the market is always correct: “In some
    cases, it may be that a single valuation metric is the most reliable evidence of fair
    value and that giving weight to another factor will do nothing but distort that best
    estimate. In other cases, it may be necessary to consider two or more factors.”239
    Whichever route it takes, however, the Court of Chancery is required to “justify its
    methodology (or methodologies) according to the facts of the case and relevant,
    accepted financial principles.”240
    1.   The Deal Price Less Synergies Deserves Dispositive Weight
    For the reasons explained below, I find that the Merger was the product of an
    open process that, although not perfect, has the requisite objective indicia of
    reliability emphasized in DFC and Dell. Thus, I conclude that the deal price, minus
    synergies, is the best evidence of fair value and deserves dispositive weight in this
    235
    
    DFC, 172 A.3d at 373
    .
    236
    
    Id. at 349.
    237
    
    Id. 238 Dell,
    177 A.3d at 23.
    239
    
    DFC, 172 A.3d at 388
    .
    240
    
    Dell, 177 A.3d at 22
    (citation omitted).
    46
    case. My consideration of the evidence supporting this conclusion follows in three
    parts focusing on (i) the opportunity many potential buyers had to bid, (ii) the Special
    Committee’s role in actively negotiating an arm’s-length transaction, and (iii) the
    evidence that the market for Solera’s stock was efficient and well-functioning.
    a.    Many Heterogeneous Potential          Buyers     Had    a
    Meaningful Opportunity to Bid
    Appraisal decisions have placed weight on the deal price when the process
    “involved a reasonable number of participants and created credible competition”
    among bidders.241 Here, Solera reached out to nine large private equity funds in May
    and June 2015 during the “test the waters” period.242 Then, after Thoma Bravo
    submitted an indication of interest on July 19, 2015,243 the Special Committee
    engaged with 18 potential bidders, 11 financial and 7 strategic firms.244 As Hubbard
    testified, a “broad range of sophisticated buyers,” both financial and strategic, had
    the chance to bid for Solera.245 Petitioners’ own expert offered no opinion “that more
    bidders should have been contacted.”246
    241
    Merion Capital L.P. v. Lender Processing, 
    2016 WL 7324170
    , at *18 (Del. Ch. Dec.
    16, 2016).
    242
    PTO ¶¶ 268, 271-78.
    243
    
    Id. ¶ 285.
    244
    
    Id. ¶¶ 295,
    307-09.
    245
    Tr. 1029-31, 1036-37 (Hubbard).
    246
    
    Id. at 132
    (Cornell).
    47
    Not only were the 18 potential bidders directly contacted and aware that
    Solera could be acquired at the right price, but “the whole universe of potential
    bidders was put on notice,”247 with increasing specificity over time, that the
    Company was considering strategic alternatives.248 Aquila publicly presaged the
    sales process during the Company’s earnings call on the May 6, 2015,249 and the
    Company confirmed it had formed a Special Committee and was contemplating a
    sale on August 20, 2015,250 the day after Bloomberg reported that Solera was
    “exploring a sale that has attracted interest from private equity firms.”251
    The press revealed not only the identities of potential buyers, but also the
    approximate amounts of their bids. On August 20, 2015, for example, the Financial
    Times reported that Vista was “considering a bid of $63 per share,” with Thoma
    Bravo and Pamplona “considering separate bids for $62 per share.”252 On September
    247
    In re Appraisal of PetSmart, Inc., 
    2017 WL 2303599
    , at *28 (Del. Ch. May 26, 2017);
    see also Tr. 1036 (Hubbard) (“Once a sales process became public in the Bloomberg story,
    anyone who wished to bid on this asset could certainly have jumped in.”); 
    Dell, 177 A.3d at 28
    (“[G]iven leaks that Dell was exploring strategic alternatives, record testimony
    suggests that [Dell’s banker] presumed that any interested parties would have approached
    the Company before the go-shop if serious about pursuing a deal.”).
    248
    Tr. 789 (Yarbrough) (“And then an upside of that is that everybody in the world knew
    that we were looking at strategic alternatives at that point.”).
    249
    JX0214.0014-15.
    250
    PTO ¶ 306.
    251
    
    Id. ¶ 305.
    252
    JX0499.0002.
    48
    9, 2015, Bloomberg reported that Solera had received bids from Vista and Thoma
    Bravo, and that the Company was “nearing a deal to sell itself for about $53 a
    share.”253 Two days later, Reuters wrote that Vista and Thoma Bravo “had made
    offers that failed to meet Solera’s valuation expectations,” and that the Company
    was “trying to sell itself to another company”—IHS—“rather than an investment
    firm.”254    The visible threat of other buyers made the sales process more
    competitive.255      Given these public disclosures, any potential bidder knew in
    essentially real time that Solera was exploring a sale and the approximate price levels
    of the offers.256 Yet no one else ever seriously showed up to make a topping bid.
    Petitioners point out that Advent and Providence were excluded from the
    sales process, but whether either would have bid competitively is unknown.
    Notably, when Advent and Providence expressed interest to Solera’s bankers,
    neither provided any indication as to their ability to pay or their sources of financing;
    rather, their introductory emails were perfunctory, suggesting to me that they were
    253
    JX0644.0001.
    254
    JX0651.0001.
    255
    Lender Processing, 
    2016 WL 7324170
    , at *18 (“Importantly, however, if bidders
    perceive a sale process to be relatively open, then a credible threat of competition can be
    as effective as actual competition.”).
    256
    Leaks of the amounts of the bids theoretically could have functioned to anchor the
    bidding process, but Solera never publicly confirmed the validity of these reports and
    petitioners have never argued that these leaks had any impact on the competitive dynamic
    among bidders.
    49
    just “kicking the tires.” 257 There also is no evidence that either of them followed up
    to express any further interest in Solera, either before or during the go-shop period.258
    The fact that only one potential strategic bidder—IHS—made a bid does not
    undermine the reliability of the sales process as a price discovery tool. That six
    potential strategic acquirers declined to explore a transaction involving Solera shows
    that six sophisticated, profit-motivated actors were offered the opportunity to
    participate in a sales process to acquire the Company, yet none was interested
    enough to even sign a non-disclosure agreement.259 As noted above, our Supreme
    Court forcefully made this point in Dell:
    The Court of Chancery stressed its view that the lack of competition
    from a strategic buyer lowered the relevance of the deal price. But its
    assessment that more bidders—both strategic and financial—should
    have been involved assumes there was some party interested in
    proceeding. Nothing in the record indicates that was the case. Fair
    value entails at a minimum a price some buyer is willing to pay—not a
    price at which no class of buyers in the market would pay. The Court
    of Chancery ignored an important reality: if a company is one that no
    257
    See JX0497; JX0556.
    258
    As petitioners acknowledge, it also is doubtful whether including more financial
    sponsors in the sales process (beyond the eleven that the Special Committee contacted)
    would have meaningfully increased competition between the bidders. Pet’rs’ Post-Trial
    Opening Br. 27-28 (Dkt. 105). See also Lender Processing, 
    2016 WL 7324170
    , at *17
    (citation omitted) (“Financial sponsors . . . predominately use the same pricing models, the
    same inputs, and the same value-creating techniques.”).
    259
    See 
    DFC, 172 A.3d at 349
    (“Any rational purchaser of a business should have a targeted
    rate of return that justifies the substantial risks and costs of buying a business. That is true
    for both strategic and financial buyers.”).
    50
    strategic buyer is interested in buying, it does not suggest a higher
    value, but a lower one.260
    The record shows, furthermore, that the mere presence in the sales process of IHS,
    as a strategic bidder that was one of Solera’s key competitors, incentivized the
    financial sponsors to put forth more competitive bids.261
    The record also reflects that the Company provided all seriously interested
    bidders access to deeper, non-public information after they signed non-disclosure
    agreements. Although the Special Committee initially excluded IHS from the
    process due to competitive concerns and doubts about its ability to finance a deal,262
    once news of the sales process leaked out, the Special Committee worked promptly
    to accommodate IHS. After IHS contacted Centerview on August 21, 2015 to
    express interest,263 representatives of Solera and IHS held a management meeting by
    August 26,264 and Solera provided IHS with the Hybrid Case Projections by August
    
    260 177 A.3d at 29
    (citing 
    DFC, 172 A.3d at 375
    n.154 (“[T]he absence of synergistic buyers
    for a company is itself relevant to its value.”)).
    261
    See Tr. 973-74 (Sowul) (“And so that party, that IHS, that strategic, could, in theory,
    pay a lot more than we could. And we knew they were interested. . . . So we would have
    to pay as little as we can to maximize our returns but pay as much as we can so that we can
    be competitive against a strategic.”); see also PetSmart, 
    2017 WL 2303599
    , at *29 (citation
    omitted) (“Importantly, the evidence reveals that the private equity bidders did not know
    who they were bidding against and whether or not they were competing with strategic
    bidders. They had every incentive to put their best offer on the table.”).
    262
    Tr. 780-82 (Yarbrough).
    263
    PTO ¶ 307.
    264
    
    Id. ¶ 312.
                                                51
    27.265 And, after IHS’s CEO failed to attend the management meeting on August
    26, Aquila traveled separately to meet him.266 IHS ultimately declined to make a
    topping bid during the go-shop period, but it was not for lack of access to
    information. Solera gave IHS nearly full access to the approximately 12,000-
    document data room,267 and IHS specifically commented that it “was appreciative of
    . . . the fact that [Solera] had provided equal access to information in order for IHS
    to consider a bid.”268
    Finally, I am not persuaded by petitioners’ argument that “[t]he sale of Solera
    took place against the backdrop of extraordinary market volatility,” such that it “was
    not the product of a well-functioning market.”269 According to petitioners, the court
    should not rely on the Merger price as evidence of fair value because there was
    macroeconomic volatility, “evidenced by the VIX spiking to an [sic] historic high
    [on August 24, 2015] and sharp declines in global equity markets,”270 which
    constrained potential bidders’ ability to finance and willingness to enter a deal.271 In
    265
    
    Id. ¶ 313.
    266
    
    Id. ¶ 312;
    Tr. 442-43 (Aquila).
    267
    PTO ¶ 351; Tr. 811 (Yarbrough).
    268
    PTO ¶ 354.
    269
    Pet’rs’ Post-Trial Opening Br. 28.
    270
    
    Id. at 28
    -29. VIX stands for the CBOE Volatility Index, which Buckberg described as
    “a measure of market expectations of near-term volatility conveyed by S&P 500 stock
    index option prices.” JX0895.0012 (Buckberg expert report).
    271
    Pet’rs’ Post-Trial Opening Br. 28-33.
    52
    support of this theory, petitioners called Dr. Elaine Buckberg as an expert on market
    volatility.272
    Buckberg testified that “investors are less willing to proceed with investments
    in the face of substantial uncertainty and volatility,” and that when investors “do
    decide to proceed with an investment in the face of such uncertainty, they would
    expect to be compensated for the additional risk with a lower price.”273 In that vein,
    Yarbrough, the Chairman of the Special Committee, candidly acknowledged that
    market volatility impacted “the financing side, [it] was making it more difficult on
    the debt financing side, and I think it also trickled over into the equity piece, too.”274
    As an initial factual matter, it is questionable whether the level of market
    volatility during the sales process was as extraordinary as petitioners suggest. On
    August 24, 2015, the VIX closed at 40.74.275 Although petitioners describe this as
    the VIX’s “highest point since January 2009” and “a level exceeded only six times
    in the VIX’s twenty-seven year history,”276 that assertion appears to be an
    exaggeration. As Hubbard testified, the August 24 closing VIX has been exceeded
    272
    Tr. 250 (Buckberg).
    273
    
    Id. at 253
    (Buckberg).
    274
    
    Id. at 852
    (Yarbrough).
    275
    JX0895.0026.
    276
    Pet’rs’ Post-Trial Opening Br. 15.
    53
    on 157 days in the VIX’s history.277 The August 24 spike also was relatively short-
    lived. By August 28, just four days after closing at 40.74, the VIX had fallen back
    to “about 26,” and had fallen further by September 11, the last trading day before
    the Special Committee accepted Vista’s $55.85 bid.278 Including the spike on
    August 24, the “average VIX was 19.4 in August 2015 and 24.4 in September, as
    compared to an average of 19.7 since 1990.”279
    Even accepting that market volatility impacted the sales process by increasing
    financing costs and decreasing the price that financial sponsors were willing to pay,
    petitioners’ argument is unavailing in my opinion for two reasons. First, Buckberg
    made no attempt to quantify the impact of volatility on the Merger price.280 Second,
    and more importantly, petitioners’ position ignores that they are only entitled to the
    fair value of Solera’s stock at the time of the Merger, not to the best price
    theoretically attainable had market conditions been the most seller-friendly.281 As
    the Supreme Court pointedly explained in DFC:
    277
    Tr. 1042-43 (Hubbard).
    278
    
    Id. at 337-38
    (Buckberg).
    279
    JX0899.0027.
    280
    See Tr. 295-96 (Buckberg); see also 
    DFC, 172 A.3d at 350
    (“[T]he fact that a financial
    buyer may demand a certain rate of return on its investment in exchange for undertaking
    the risk of an acquisition does not mean that the price it is willing to pay is not a meaningful
    indication of fair value.”).
    281
    
    DFC, 172 A.3d at 370
    .
    54
    Capitalism is rough and ready, and the purpose of an appraisal is not to
    make sure that the petitioners get the highest conceivable value that
    might have been procured had every domino fallen out of the
    company’s way; rather, it is to make sure that they receive fair
    compensation for their shares in the sense that it reflects what they
    deserve to receive based on what would fairly be given to them in an
    arm’s-length transaction.282
    The record demonstrates that the Merger price “resulted from an open process,
    informed by robust public information, and easy access to deeper, non-public
    information, in which many parties with an incentive to make a profit had a chance
    to bid.”283 Thus, consistent with our high court’s recent teachings, economic
    principles suggest that the Merger price is what petitioners “deserve to receive” for
    their shares.
    b.    A Fully-Empowered Special Committee Actively
    Negotiated the Merger
    Reliance on the deal price as evidence of fair value is strengthened when
    independent representatives of a target company actively negotiate with potential
    buyers and demonstrate a real willingness to reject inadequate bids.284 Here, the
    record indicates that Solera’s Special Committee was both competent and effective.
    282
    
    Id. at 370-71.
    283
    
    Id. at 349.
    284
    See 
    Dell, 177 A.3d at 28
    (“The Committee, composed of independent, experienced
    directors and armed with the power to say ‘no,’ persuaded [the bidder] to raise its bid six
    times. Nothing in the record suggests that increased competition would have produced a
    better result.”); PetSmart, 
    2017 WL 2303599
    , at *30 (“Had the auction not generated an
    offer that the Board deemed too good to pass up, I am satisfied that the Board was ready to
    pursue other initiatives as a standalone company.”); Lender Processing, 
    2016 WL 55
                On July 20, 2015, the day after receiving an indication of interest from Thoma
    Bravo, the Board delegated to the Special Committee the “full power and authority
    of the Board” to review, evaluate, negotiate, recommend, or reject any proposed
    transaction or strategic alternative.285 The authorizing resolution further provided
    that Solera could not do a deal without the Special Committee’s approval.286 All
    three directors on the Special Committee were independent and experienced.287
    Yarbrough, the Chairman of the Special Committee, testified knowledgeably and
    forthrightly at trial about the process undertaken by the Special Committee, which
    was aided by reputable legal and financial advisors.288 Petitioners tellingly make no
    effort to impugn the motives of any of the members of the Special Committee.
    The record also demonstrates that the Special Committee actively engaged
    with the bidders, did not favor any one in particular, and expressed a willingness to
    walk away from bids that it did not find satisfactory. The Special Committee twice
    rejected bids that it considered inadequate—Vista’s bid at $53 per share289 and
    7324170, at *19 (“Reinforcing the threat of competition from other parties was the realistic
    possibility that the Company would reject the [] bid and pursue a different alternative.”).
    285
    JX0359.0002.
    286
    
    Id. 287 Tr.
    754-56, 771-72 (Yarbrough).
    288
    
    Id. at 776-78
    (Yarbrough).
    289
    PTO ¶ 334.
    56
    Thoma Bravo’s bid at $54 per share290—each time without the safety net of another
    offer.291 The Special Committee’s initial decision to defer inviting IHS into the sales
    process was reasonable, given its concerns about protecting Solera’s competitively
    sensitive information and about IHS’s ability to finance a transaction.292 In any
    event, that decision became academic after news of the sales process leaked in the
    press, at which point the Company promptly engaged with IHS for over two weeks
    before signing a deal with Vista. Critically, as a condition of that deal, the Special
    Committee extracted the right to conduct a go-shop and for a reduced 1% termination
    fee for IHS (as opposed to 3% for other bidders) to facilitate continued discussions
    with IHS.293 And, for reasons explained below, the negotiations with all bidders
    were not skewed by an artificially low stock price, since the market for Solera’s
    stock before the Merger appears to have been efficient.294
    290
    
    Id. ¶ 338.
    291
    Tr. 806-07 (Yarbrough).
    292
    See PetSmart, 
    2017 WL 2303599
    , at *28 (emphasis in original) (“I note that the Board
    considered inviting the most likely strategic partner . . . into the process, but made the
    reasoned decision that, without a firm indication of interest from [the competitor], the risks
    of providing [the company’s] most direct competitor with unfettered access to [the
    company’s] well-stocked data room outweighed any potential reward. Nevertheless, the
    evidence revealed that the Board held the door open for [the competitor] to join the auction
    if it expressed serious interest in making a bid.”).
    293
    PTO ¶¶ 325, 339, 350.
    294
    See infra Section III.D.1.c.
    57
    Finally, the evidence shows that the Special Committee made a thoughtful,
    reasoned decision to accept Vista’s “last and final” offer at $55.85 after countering
    with $56 and being rejected.295 Before the Special Committee did so, Centerview
    counseled the Special Committee that “[i]t is uncertain whether extending the
    process will result in higher and fully financed offers, or will lead to further
    deterioration in Vista’s bid” and that the “Vista bid can act as a pricing floor while
    IHS is given a further opportunity to bid at a reduced termination fee pursuant to the
    go-shop negotiated by the Committee.”296 As Yarbrough testified, with that advice
    in mind, the Special Committee unanimously decided to accept Vista’s offer after
    comparing it to the Company’s stand-alone prospects:
    We then asked for Centerview to go through a presentation analysis of
    [Vista’s bid], with the preliminary steps to their fairness opinion. And
    then we ultimately had a vote on it, discussed stand-alone, decided that
    we preferred the 55.85 and moving forward with an all-cash, riskless
    deal. And so we had a unanimous vote on the special committee, and
    then we had a board meeting shortly thereafter where Centerview again
    presented to the board. We made our recommendation to the board and
    then the board unanimously accepted the recommendation.297
    In response to this evidence, petitioners advance essentially two arguments
    challenging the integrity and quality of the sales process. I address each in turn.
    295
    Tr. 807-08 (Yarbrough).
    296
    JX0633.0013.
    297
    Tr. 807-08 (Yarbrough).
    58
    Petitioners’ primary challenge is that Aquila’s conflicts of interest tainted the
    sales process through meetings he (with Baron’s assistance) held with private equity
    firms before, and on one notable occasion after, the Special Committee was formed.
    Although Solera’s Board could have done a better job of monitoring Aquila and his
    interactions with potential buyers, particularly after the Special Committee was in
    place, those interactions did not compromise the integrity or effectiveness of the
    sales process in my opinion.
    The reality is that Aquila’s participation in a transaction was a prerequisite for
    a financial sponsor to do a deal. As petitioners put it, “Aquila is Solera.”298
    Consistent with that reality, all of the private equity firms that later submitted bids
    made clear that those bids depended on Aquila continuing to lead the Company.299
    In other words, a go-private transaction never would have been a possibility without
    buyers becoming personally acquainted and comfortable with Aquila. Thus, Aquila
    engaging in one-on-one conversations with private equity firms before the Special
    Committee was formed had the utility of gauging interest in the Company to see if
    298
    Pet’rs’ Post-Trial Opening Br. 4 (emphasis in original).
    299
    JX0340.0003 (“We are contemplating this deal solely in the context of being able to
    partner with Tony Aquila and his management team.”) (Thoma Bravo); JX0464.0005 (“We
    have been impressed by the high caliber of the management team we have met, and look
    forward to forming a successful and productive partnership with them and the other
    members of the Solera management team.”) (Vista); JX0464.0008 (“Our team is ecstatic
    about the opportunity to partner with Tony and other members of senior management.”)
    (Pamplona).
    59
    undertaking a formal sales process made sense. Critically, there is no indication in
    the record that any of those contacts predetermined or undermined the process when
    the Special Committee took charge.
    That said, once the Company had received an indication of interest and put
    the Special Committee in place, the Special Committee should have monitored
    Aquila’s contacts with potential bidders more carefully. Petitioners justifiably
    criticize Aquila’s private two-hour meeting with Vista in August, shortly after which
    Vista began to model a larger option pool for post-Merger Solera executives.300
    Although Aquila and Sowul (a principal at Vista) both testified that compensation
    was not discussed during that meeting or at any time before the deal with Vista was
    signed301—and there is no direct evidence that it was—the timing is certainly
    suspicious and casts doubt on whether Aquila abided by the “Rules of the Road”
    advice the Special Committee’s counsel provided, i.e., to refrain from discussing
    post-Merger employment and compensation during the sales process.302 If best
    practices had been followed, a representative of the Special Committee would have
    accompanied Aquila to the August meeting with Vista as a precaution.303
    300
    JX0525; JX0541.
    301
    Tr. 452 (Aquila), 971-73 (Sowul).
    302
    Tr. 782-83 (Yarbrough); JX0380.0003-05.
    303
    See In re Lear Corp. S’holder Litig., 
    926 A.2d 94
    , 117 (Del. Ch. 2007) (Strine, V.C.)
    (“I believe it would have been preferable for the Special Committee to have had its
    chairman or, at the very least, its banker participate with [the CEO] in negotiations with
    60
    Even if it is assumed that compensation discussions did occur during this
    meeting, nothing in the record indicates that any of Aquila’s (or Baron’s) actions
    before or during the sales process compromised or undermined the Special
    Committee’s ability to negotiate a deal.304 The record is devoid of any evidence, for
    example, that Aquila participated in price discussions with any of the bidders or
    influenced the outcome of a competitive sales process. Indeed, petitioners do not
    contend that Aquila ever discussed price with the Special Committee or any bidder,
    nor do they contend that he played any role in the deliberations or decision-making
    process of the Special Committee more generally.
    Further, the record does not show that structural issues inhibited the
    effectiveness of the go-shop.305 To the contrary, IHS indicated that it appreciated
    that the Company was transparent and facilitated its diligence. There also was a
    lower termination fee if IHS submitted a topping bid. In short, IHS had a realistic
    pathway to success,306 but it ultimately decided not to submit a topping bid.
    [the buyer]. By that means, there would be more assurance that [the CEO] would take a
    tough line and avoid inappropriate discussions that would taint the process.”).
    304
    I view Baron’s statement in an email to his colleagues at Rothschild that “we were the
    architects with the CEO from the beginning as to how to engineer the process from start to
    finish” to be puffery. The email completely ignores Centerview’s role in the sales process,
    and Baron’s statement that he is “excited to . . . market the heck out of this for future
    business” betrays his motivation for exaggerating his involvement in the transaction.
    Notably, three recipients of Baron’s email were his superiors at Rothschild. JX0670.0002.
    305
    
    Dell, 177 A.3d at 31-32
    .
    306
    
    Id. 61 As
    a secondary matter, petitioners advance a one-paragraph argument that the
    Merger was a de facto MBO (management buyout) because the Special Committee
    “knew” that if Solera was to be sold, it was going to be sold to a private equity firm,
    and all the private equity firms made clear that they “only wanted Solera if Aquila
    was part of the deal.”307         Petitioners thus contend that the Merger warrants
    “heightened scrutiny.” 308 This argument fails for essentially two reasons.
    First, contrary to petitioners’ characterization of the transaction, the Merger
    did not have the requisite characteristics of an MBO. Petitioners’ own expert
    (Cornell) agreed that the common definition of an MBO is a transaction “where,
    when it was negotiated, senior management was a participant in the transaction as
    an acquirer,” but then conceded that the Merger was not an MBO because “it was
    not a joint purchase between management and another party.”309 During the sales
    process, Aquila did not have an agreement with Vista or any other bidder to
    participate as a buyer in a particular transaction.310 To the contrary, he expressed a
    willingness to invest $15 million in a transaction with any of the potential buyers,
    307
    Pet’rs’ Post-Trial Opening Br. 26.
    308
    
    Id. at 27.
    309
    JX0902.0005; see also Tr. 148-49 (Cornell).
    310
    JX0899.0011.
    62
    not just Vista.311 Further, Aquila was a not an “acquirer” in the Merger312 because,
    before the transaction, Aquila’s holdings at the $55.85 per share were worth
    approximately $55 million,313 and after the Merger, Aquila invested $45 million into
    the post-Merger company.314 In short, as Cornell admitted, the Merger was not even
    “similar to an MBO.”315
    Second, petitioners contend that MBOs should be subject to “heightened
    scrutiny” but fail to explain why. As the Supreme Court stated in Dell, even though
    there may be “theoretical characteristics” of an MBO that could “detract[] from the
    reliability of the deal price,”316 the deal price that results from an MBO is not
    inherently suspect or unreliable per se.317 Here, to repeat, the Special Committee
    had the full authority to control the sales process, and exercised that authority by
    deciding which bidders to contact, how to respond to bids, and ultimately whether
    to approve the Merger.
    311
    Tr. 589 (Aquila).
    312
    Tr. 1034 (Hubbard) (“Q. Was Mr. Aquila a net buyer in this transaction? A. Not the
    way economists would use that term, no. Q. And how do you understand that term? A.
    Actually, the economic definition is pretty much as the plain English. It would mean
    contributing new cash as a net buyer. That did not happen.”).
    313
    JX0899.0009.
    314
    PTO ¶¶ 382-387.
    315
    Tr. 148-49 (Cornell).
    316
    
    Dell, 177 A.3d at 31
    .
    317
    See 
    id. at 6
    (noting that the features of an MBO transaction that may render the deal
    price unreliable “were largely absent” in the Dell MBO).
    63
    c.      The Equity and Debt Markets Corroborate that the
    Best Evidence of Solera’s Fair Value was the Merger
    Price
    In DFC, the Supreme Court endorsed the economic proposition that the “price
    at which [a company’s] shares trade is informative of fair value” in an appraisal
    action when “the company had no conflicts related to the transaction, a deep base of
    public shareholders, and highly active trading,” because “that value reflects the
    judgments of many stockholders about the company’s future prospects, based on
    public filings, industry information, and research conducted by equity analysts.”318
    The Court in Dell reiterated the same point, explaining that in an efficient market “a
    mass of investors quickly digests all publicly available information about a
    company, and in trading the company’s stock, recalibrates its price to reflect the
    market’s adjusted, consensus valuation of the company.”319 My inference from
    DFC and Dell is that the Supreme Court has emphasized this point because the price
    318
    
    DFC, 172 A.3d at 373
    .
    319
    
    Dell, 177 A.3d at 25
    (citation omitted); see also JX0894.0034 (Hubbard expert report)
    (“In a well-functioning stock market, a company’s market price quickly reflects publicly
    available information. A market price balances investors’ willingness to buy and sell the
    shares in light of this information, and thus represents their consensus view as to the value
    of the equity of the company. As a result, finance academics view market prices as an
    important indicator of intrinsic value absent evidence of frictions that impede market
    efficiency.”).
    64
    of a widely dispersed stock traded in an efficient market may provide an informative
    lower bound in negotiations between parties in a potential sale of control.320
    Here, the record supports the conclusion that the market for Solera’s stock
    was efficient and well-functioning, since: (i) Solera’s market capitalization of about
    $3.5 billion placed it in the middle of firms in the S&P MidCap 400 index;321 (ii) the
    stock was actively traded on the New York Stock Exchange, as indicated by weekly
    trading volume of 4% of shares outstanding;322 (iii) the stock had a relative bid-ask
    spread of approximately 0.06%, in line with a number of S&P MidCap 400 and S&P
    500 companies;323 (iv) the Company’s short interest ratio indicated that, on average,
    investors who had sold the stock short would be able to cover their positions in about
    two days, which was faster than about three-quarters of S&P 400 MidCap companies
    and about half of S&P 500 companies;324 (v) at least eleven equity analysts covered
    320
    See 
    Dell, 177 A.3d at 27
    n.131 (“This is evident as the court observed that the stock
    price anchors negotiations and, if the stock price is low, the deal price necessarily might be
    low.”).
    321
    JX0894.0035. The S&P MidCap 400 contains 400 firms that are generally smaller than
    those in the S&P 500 but “capture a period in the typical enterprise life cycle in which
    firms have successfully navigated the challenges inherent to small companies, such as
    raising initial capital and managing early growth.” Mid Cap: A Sweet Spot for
    Performance,       S&P      DOW     JONES      INDICES      1     (September       2015),
    https://us.spindices.com/documents/education/practice-essentials-mid-cap-a-sweet-spot-
    for-performance.pdf.
    322
    JX0894.0035, 137.
    323
    
    Id. 324 Id.
                                                 65
    Solera during the year before the Merger; 325 and (vi) Solera’s stock price moved
    sharply as rumor of the sales process leaked into the market.326
    The proxy statement for the Merger identified August 3, 2015 as the
    unaffected date for purposes of calculating a premium. 327 As of that date, a well-
    informed, liquid trading market determined, before news of a potential transaction
    leaked into the market, that the Company’s stock was worth $36.39.328 Significantly,
    research analysts’ price targets had been declining in the months before news of a
    potential transaction, and these targets remained below the deal price through
    announcement of the Merger.329 As Hubbard put it, the takeaway from these two
    objective indications of value is that “market participants playing with real money,
    looking at the information that they have, don’t think that the stock is worth $55.85
    during that period.”330
    325
    JX0894.0035.
    326
    See JX0842-43 (observing that Solera’s stock rose more than ten percent on multiple
    times its normal daily trading volume on August 4 and 5, 2015, and concluding that “this
    trading activity is consistent with trading on rumors of a transaction”).
    327
    PTO ¶ 363.
    328
    
    Id. ¶ 364
    & Ex. A.
    329
    Tr. 1052-53 (Hubbard); JX0894.0047-48.
    330
    Tr. 1053 (Hubbard). See also 
    DFC, 172 A.3d at 369
    (quoting Applebaum v. Avaya,
    Inc., 
    812 A.2d 880
    , 889-90 (Del. 2002)) (“[A] well-informed, liquid trading market will
    provide a measure of fair value superior to any estimate the court could impose.”).
    66
    Despite these market realities, petitioners contend that Solera was worth
    $84.65 per share—more than double its unaffected stock price of $36.39 per share
    as of August 3.331 Although one would expect a control block to trade at a higher
    price than a minority block,332 petitioners are unable to explain such a gaping
    disconnect between Solera’s unaffected market price and the Merger price.
    Petitioners argue that the pre-Merger stock price was artificially low because
    the market for Solera was not efficient due to asymmetric information. More
    specifically, petitioners contend that Solera was “poised to ‘harvest returns’” 333 from
    acquisitions it made between 2012 and 2015, but management struggled to disclose
    sufficient information, due to competitive concerns, to allow the market to value the
    Company properly.334 This argument ignores evidence that many equity investors
    and analysts actually did understand Solera’s long-term plans, with some approving
    of management’s strategy but others not buying the story.335 Consider the following
    331
    Pet’rs’ Post-Trial Opening Br. 4.
    332
    See, e.g., 
    DFC, 172 A.3d at 369
    n.117 (“One of the reasons, of course, why a control
    block trades at a different price than a minority block is because a controller can determine
    key issues like dividend policy.”); IRA Tr. v. Crane, 
    2017 WL 7053964
    , at *7 n.54 (Del.
    Ch. Dec. 11, 2017) (“That control of a corporation has value is well-accepted.”).
    333
    Pet’rs’ Post-Trial Opening Br. 6.
    334
    See, e.g., PTO ¶¶ 243-44.
    335
    
    Dell, 177 A.3d at 26-27
    ; see also 
    id. at 24
    (“[A]nalysts scrutinized [the company’s]
    long-range outlook when evaluating the Company and setting price targets, and the market
    was capable of accounting for [the company’s] recent mergers and acquisitions and their
    prospects in its valuation of the Company.”).
    67
    varied perspectives that analysts (and one of the petitioners) expressed within just a
    few months before news of the sales process leaked to the press:
    Positive                                        Negative
    “After years of M&A, [Solera] is                 “Solera’s story remains more complicated
    confident the various pieces it has been         than most investors would like, we see
    putting together are finally starting to         more downside risk to estimates in the
    make more sense. More financial                  short term, and there are some valid
    disclosures (started); a renewed IR push         concerns and criticisms of the story
    and new branding efforts . . . are all efforts   presently.” (William Blair, July 13,
    to help investors better understand Tony’s       2015)339
    vision.” (Barclays, April 13, 2015)336
    “Since hitting a peak equity value in early
    “While we acknowledge some shareholder calendar year 2014 at $4.8 billion, the
    angst over share price performance           negative effect of sub-par returns from
    relative to the market and the group, we     acquisitions, increased leverage and
    believe there is inherent franchise value in growth in interest expense has reduced
    this collection of assets and businesses.    shareholder value by over $2.2 billion to
    Tony Aquila, Solera’s CEO, should be         $2.6 billion. . . . A frequent complaint
    instrumental in optimizing its competitive from investors regarding a potential
    position and generating shareholder value. investment in [Solera] is a lack of
    As a result, [Solera] remains an attractive confidence in both management and the
    risk/reward, in our view, for patient        Board of Directors.” (Barrington
    investors whose risk profile can tolerate    Research, July 20, 2015)340
    elevated financial leverage.” (SunTrust
    Robinson Humphrey, July 17, 2015)337         “With significantly higher leverage, down
    earnings over the next 12 months, and
    “We appreciate Solera’s strategy of          recent inconsistent performance, we are
    moving into tangential markets that align    stepping to the sidelines until we get
    with the company’s core business while       increased clarity into either accelerating
    still providing diversification away from    revenue growth or a return to sustainable
    auto claims. Recent acquisitions and         earnings growth.” (Piper Jaffray, July 20,
    investments show progress on                 2015)341
    336
    JX0202.0001.
    337
    JX0328.0001.
    339
    JX0312.0002.
    340
    JX0348.0002.
    341
    JX0344.0002.
    68
    Positive                                      Negative
    management’s long-term strategy to             The Fir Tree petitioners “decide[d] to
    capture more of a household’s auto and         throw in the towel on [Solera]” and sold
    insurance related decisions by leveraging      their shares in mid-2015 because, in part,
    [Solera’s] existing assets into attractive     the Company was “taking margins down,”
    adjacencies and horizontal products.” (J.P.    “will pay anything for an asset they like,”
    Morgan, July 21, 2015)338                      and leverage reached “5.5x-6x” after its
    most recent acquisition. (Fir Tree email to
    Bloomberg, July 15, 2015)342
    These reviews suggest that there was disagreement in the financial community
    over Solera’s strategy, not that the market as a whole did not understand it. Given
    the many factors indicating that the market for the Company’s stock was efficient,
    the market presumably would have digested all of these sentiments and incorporated
    them into Solera’s stock price. Yet Solera’s pre-Merger unaffected stock price as of
    August 3 was still only $36.39.
    The debt market further corroborates that, given its operative reality, Solera
    was not as valuable as petitioners contend. Petitioners do not dispute that the debt
    market had run dry for Solera as a public company as of the Merger. With its
    leverage already rising, the Company made an acquisition in November 2014,
    financing the deal with a $400 million notes offering.343              Moody’s promptly
    downgraded the Company’s credit rating from Ba2 to Ba3.344 In July 2015, after
    338
    JX0350.0002.
    342
    JX0319.0001.
    343
    Tr. 393-96 (Aquila).
    344
    JX0140.0003.
    69
    Solera issued $850 million of senior unsecured notes to finance another acquisition
    and retire outstanding debt, Moody’s downgraded Solera again, from Ba3 to B1.345
    Further exemplifying Solera’s challenges in taking on additional debt to finance
    acquisitions, the July 2015 debt offering fell short, and Goldman Sachs had to absorb
    $11.5 million of notes that it was unable to syndicate into the market.346
    By July 2015, “despite the lucrative fees that investment bankers make from
    refinancing a large tranche of public company debt and syndicating a new issue,”347
    Solera had run “out of runway” in the debt market.348 “In other words, participants
    in the public bond markets weren’t convinced they would get their money back if
    they gave it to [Solera], and [Solera] was not offering enough interest to compensate
    investors for the risk they saw in the company.”349 Petitioners’ own expert admitted
    that the acquisition debt market for Solera was tight at equity values greater than the
    Merger price.350 In short, the debt market, like many equity market participants,
    345
    JX0310.0004.
    346
    Tr. 413-14 (Aquila); JX0318.0001.
    347
    
    DFC, 172 A.3d at 355
    .
    348
    Tr. 399-401 (Aquila).
    349
    
    DFC, 172 A.3d at 374
    .
    350
    See Tr. 114 (Cornell) (“[I]n this market condition, for whatever reason, there wasn’t a
    lot of cheap debt available, and that limited what a private equity firm’s going to be able
    to pay and satisfy itself and its shareholders.”); see also 
    DFC, 172 A.3d at 375
    (“As is the
    case with refinancings, so too do banks like to lend and syndicate the acquisition debt for
    an M&A transaction if they can get it done. That is how they make big profits. That
    lenders would not finance a buyout of DFC at a higher valuation logically signals weakness
    in its future prospects, not that debt providers and equity buyers were all mistaken. So did
    70
    viewed Solera skeptically and perceived its growth-by-acquisition strategy as laden
    with risk.351
    *****
    To summarize, the Merger was the product of a two-month outreach to large
    private equity firms in May and June, a six-week auction by an independent Special
    Committee that solicited eleven private equity and seven strategic firms, and public
    announcements that put a “For Sale” sign on the Company. The Special Committee
    had competent advisors and the power to say no to an underpriced bid, which it did
    twice. The Merger price of $55.85 proved to be a market-clearing price through a
    28-day go-shop and a three-month window-shop. No one was willing to pay more.
    Thus, as this court once put it, the “logical explanation . . . is self-evident”: Solera
    “was not worth more” than $55.85 per share.352
    the fact that DFC’s already non-investment grade debt suffered a downgrade in 2013 and
    then was put on a negative credit watch in 2014.”).
    351
    See 
    DFC, 172 A.3d at 349
    (“Like any factor relevant to a company’s future
    performance, the market’s collective judgment of the effect of . . . risk may turn out to be
    wrong, but established corporate finance theories suggest that the collective judgment of
    the many is more likely to be accurate than any individual’s guess. When the collective
    judgment involved, as it did here, not just the views of the company stockholders, but also
    those of potential buyers of the entire company and those of the company’s debtholders
    with a self-interest in evaluating the regulatory risks facing the company, there is more, not
    less, reason to give weight to the market’s view of an important factor.”).
    352
    Highfields Capital. Ltd. v. AXA Fin., Inc., 
    939 A.2d 34
    , 60 (Del. Ch. 2007).
    71
    2.   Merger Fees Should not be Added to the Deal Price
    Petitioners argue that, “if deal price is an indicator of fair value,” the court
    should add nearly $450 million—or $6.51 per share—to the Merger price.
    According to petitioners, this is the amount of transaction costs Vista incurred in
    connection with the Merger for buyer fees and expenses, seller fees, debt fees, and
    an “early participation premium” to retire debt in connection with the transaction.353
    Petitioners offer no precedent or other legal support for this request. They simply
    contend that these costs should be added because the court’s “focus should be on
    what Vista was actually willing to spend to buy the Company.” 354 This argument
    fails for two independent reasons.
    First, petitioners’ argument cannot be squared with the definition of “fair
    value” in the appraisal context that our Supreme Court recently articulated in DFC
    when explaining the purpose of appraisal:
    [F]air value is just that, “fair.” It does not mean the highest possible
    price that a company might have sold for had Warren Buffet negotiated
    for it on his best day and the Lenape who sold Manhattan on their worst.
    . . . [T]he purpose of appraisal is not to make sure that the petitioners
    get the highest conceivable value that might have been procured had
    every domino fallen out of the company’s way; rather, it is to make
    sure that they receive fair compensation for their shares in the sense
    that it reflects what they deserve to receive based on what would fairly
    be given to them in an arm’s-length transaction.355
    353
    Pet’rs’ Post-Trial Opening Br. 34-35.
    354
    
    Id. at 35.
    355
    
    DFC, 172 A.3d at 370
    -71 (emphasis added).
    72
    The Merger price was the result of arm’s-length bargaining between the Special
    Committee and Vista. Perhaps Vista would have been willing to pay more than
    $55.85 for the Company, but that is irrelevant to the court’s independent
    determination of fair value as that term was explained in DFC.356
    Second, policy concerns counsel against adding transaction fees to the deal
    price in determining Solera’s fair value. If stockholders received payment for
    transaction fees in appraisal proceedings, then it would compel rational stockholders
    in even the most pristine deal processes to seek appraisal to capture their share of
    the transaction costs (plus interest) that otherwise would be unavailable to them in
    any non-litigated arm’s-length merger.            This incentive would undermine the
    underlying purpose of appraisal proceedings as explained in DFC.
    3.     Deduction for Merger Synergies
    The appraisal statute provides that “the Court shall determine the fair value of
    the shares exclusive of any element of value arising from the accomplishment or
    expectation of the merger.”357 Thus, the “appraisal award excludes synergies in
    356
    The Supreme Court also made clear that a deal price arrived at by using an LBO model
    can be the most reliable evidence of fair value of a target company. See 
    DFC, 172 A.3d at 350
    (“[T]he fact that a financial buyer may demand a certain rate of return on its investment
    in exchange for undertaking the risk of an acquisition does not mean that the price it is
    willing to pay is not a meaningful indication of fair value.”).
    357
    
    8 Del. C
    . §262(h).
    73
    accordance with the mandate of Delaware jurisprudence that the subject company in
    an appraisal proceeding be valued as a going concern.”358
    Synergies do not only arise in the strategic-buyer context. It is recognized
    that synergies may exist when a financial sponsor is an acquirer.359 As of trial, Vista
    owned 40 software businesses, three of which (EagleView, Omnitracs, and
    DealerSocket) Vista believed had significant “touch points” with Solera from which
    synergies could be realized.360
    Vista modeled out four different categories of synergies in its financial
    analysis of the Company during the bidding process.361 Respondent’s expert
    presented evidence at trial concerning three of those categories: portfolio company
    revenue synergies, private company cost savings, and the tax benefits of incremental
    leverage.362 In total, he calculated total expected synergies of $6.12 per share.363
    From there, respondent’s expert made a “conservative” estimate that 31% of the
    358
    Union Ill. 1995 Inv. Ltd. P’ship v. Union Fin. Gp., Ltd., 847 A.2d, 340, 343 (Del. Ch.
    2004) (Strine, V.C).
    359
    See, e.g., PetSmart, 
    2017 WL 2303599
    , at *31 n.364 (citation omitted) (noting
    “synergies financial buyers may have with target firms arising from other companies in
    their portfolio”); Lender Processing, 
    2016 WL 7324170
    , at *17 n.14 (noting that “a source
    of private value” to a financial buyer is “a synergistic portfolio company”).
    360
    Tr. 908-16 (Sowul); JX0613.0033.
    361
    
    Id. at 908-09
    (Sowul).
    362
    
    Id. at 1045-48
    (Hubbard); JX0894.0066-71.
    363
    
    Id. at 1045-46
    (Hubbard); JX0894.0070-71.
    74
    value of the synergies—equating to $1.90 per share—remained with the seller by
    using the lowest percentage identified in one of three empirical studies.364
    I find this evidence, which petitioners made no effort to rebut, convincing.365
    Deducting $1.90 from the Merger price of $55.85 leads to a value of $53.95 per
    share. For all the reasons discussed above, and based on my lack of confidence in
    the DCF models advanced by the parties (as discussed next), I conclude that this
    amount ($53.95 per share) is the best evidence of the fair value of petitioners’ shares
    of Solera at the time of the Merger.
    4.     The Dueling Discounted Cash Flow Models
    Consistent with the court’s duty to consider “all relevant factors” in
    determining Solera’s fair value,366 I consider next the DCF models the parties’
    364
    Tr. 1047-48 (Hubbard); JX0894.0070-71. This 31% figure is the “median portion of
    synergies shared with the seller” as determined by a 2013 Boston Consulting Group study
    of 365 deals. JX0894.0070-71. Although the appraisal statute mandates excision of
    synergies specific to the merger at issue, this court has used general estimates of the
    percentage of synergies shared, as provided by experts, to derive appraisal value from deal
    price. See Union 
    Ill., 847 A.2d at 353
    & n.26 (relying on a “reasonable synergy discount”
    propounded by a party’s expert).
    365
    See 
    DFC, 172 A.3d at 371
    (“Part of why the synergy excision issue can be important is
    that it is widely assumed that the sales price in many M&A deals includes a portion of the
    buyer’s expected synergy gains, which is part of the premium the winning buyer must pay
    to prevail and obtain control.”).
    366
    See 
    8 Del. C
    . § 262(h) (“In determining such fair value, the Court shall take into account
    all relevant factors.”); 
    DFC, 172 A.3d at 388
    (“But, in keeping with our refusal to establish
    a ‘presumption’ in favor of the deal price because of the statute’s broad mandate, we also
    conclude that the Court of Chancery must exercise its considerable discretion while also
    explaining, with reference to the economic facts before it and corporate finance principles,
    why it is according a certain weight to a certain indicator of value.”).
    75
    experts prepared. Compared with a market-generated transaction price, “the use of
    alternative valuation techniques like a DCF analysis is necessarily a second-best
    method to derive value.”367
    In this action, both parties’ experts created “three-stage” DCF models
    consisting of (i) the five-year Hybrid Case Projections (fiscal years 2016 through
    2020), (ii) a five-year transition period (fiscal years 2021 through 2025), and (iii) a
    terminal period beginning in fiscal year 2026.368 The outcome of these models
    nonetheless resulted in widely divergent DCF valuations—$84.65 per share for
    petitioners, and $53.15 per share for respondent.
    As a preliminary matter, I find comfort that respondent’s DCF analysis is in
    the same ballpark as the deal price less estimated synergies.369 On the other side of
    the ledger, given my conclusions about the quality of the sales process for Solera,
    petitioners’ DCF analysis strikes me as facially unbelievable as it suggests that, in a
    transaction with an equity value of approximately $3.85 billion at the deal price,370
    potential buyers left almost $2 billion on the table by not outbidding Vista. Our
    367
    Union 
    Ill., 847 A.2d at 359
    .
    368
    JX0894.0075 (Hubbard); JX0898.0098, 0124 (Cornell).
    369
    See S. Muio & Co. LLC v. Hallmark Entm’t Invs. Co., 
    2011 WL 863007
    , at *20 (Del.
    Ch. Mar. 9, 2011) (quoting Hanover Direct, Inc. S’holders Litig., 
    2010 WL 3959399
    , at
    *2-3 (Del. Ch. Sept. 24, 2010)) (noting that the court “gives more credit and weight to
    experts who apply ‘multiple valuation techniques that support one another’s conclusions’
    and that ‘serve to cross-check one another’s results.’”), aff’d, 
    35 A.3d 419
    (Del. 2011).
    370
    JX0835.
    76
    Supreme Court has acknowledged that a DCF that results in a valuation so
    substantially below the transaction price may indeed lack “credibility on its face.”371
    “Delaware courts must remain mindful that ‘the DCF method is [] subject to
    manipulation and guesswork [and that] the valuation results that it generates in the
    setting of a litigation [can be] volatile.”372 “[E]ven slight differences in [a DCF’s]
    inputs can produce large valuation gaps.”373 A number of factors explain the gaping
    difference between petitioners’ and respondent’s DCF analyses, and, notably, many
    of these disagreements relate to how to value Solera into perpetuity.                 Such
    assumptions about Solera’s business in the terminal period, i.e., ten-plus years into
    the future, are unavoidably tinged with a heavy dose of speculation.
    371
    See 
    Dell, 177 A.3d at 36
    (citations omitted) (“As is common in appraisal proceedings,
    each party—petitioners and the Company—enlisted highly paid, well-credentialed experts
    to produce DCF valuations. But their valuation landed galaxies apart—diverging by
    approximately $28 billion, or 126%. . . . The Court of Chancery recognized that ‘[t]his is
    a recurring problem,’ and even believed the ‘market data is sufficient to exclude the
    possibility, advocated by the petitioners’ expert, that the Merger undervalued the Company
    by $23 billion.’ Thus, the trial court found petitioners’ valuation lacks credibility on its
    face. We agree.”); PetSmart, Inc., 
    2017 WL 2303599
    , at *2 (“Moreover, the evidence does
    not reveal any confounding factors that would have caused the massive market failure, to
    the tune of $4.5 billion (a 45% discrepancy).”); 
    Highfields, 939 A.2d at 52
    (citation
    omitted) (disregarding analysis that was “markedly disparate from market price data for
    [the company’s] stock and other independent indicia of value”).
    372
    PetSmart, 
    2017 WL 2303599
    , at *40 n.439 (quoting William T. Allen, Securities
    Markets as Social Products: The Pretty Efficient Capital Market Hypothesis, 28 J. CORP.
    L. 551, 560 (2003)).
    373
    
    Dell, 177 A.3d at 38
    .
    77
    I highlight below some of the major areas of disagreement between the parties.
    This discussion is meant to be illustrative and not exhaustive.             All of these
    disagreements predictably result in a higher asserted valuation by petitioners and a
    lower asserted valuation by respondent.
    The most significant point of contention in the DCF models concerns the
    estimated amount of cash that Solera would need to reinvest over the terminal
    period.374 This “plowback” rate is the percentage of after-tax operating profits that
    the Company would need to invest to grow at a specified rate into perpetuity.375
    Using the method identified in “many leading valuation texts including Damodaran
    (2012) and Koller, Goedhart and Wessels (2015),” which petitioners’ expert has
    called the “traditional model,”376 respondent argues that the required reinvestment
    rate is 37.1%.377 Petitioners, on the other hand, argue that the inflation plowback
    formula published in articles written by Bradley and Jarrell should be used, resulting
    in a required reinvestment rate of only 16.4%.378 According to petitioners, holding
    374
    JX0899.0004.
    375
    JX0899.0045.
    376
    JX1419.0002, 0007.
    377
    JX0894.0082; Tr. 1067-68, 1189 (Hubbard).
    378
    JX0900.0027; Tr. 64-66, 77-81 (Cornell). Respondent not only argues that it is incorrect
    to apply Bradley/Jarrell, but that petitioners also misapplied the formula. Specifically,
    respondent argues that petitioners erred by applying their Bradley/Jarrell-derived
    investment rate to net operating profit after tax (NOPAT) instead of net cash flow (NCF).
    According to respondent, this mistake resulted in improperly assuming away Solera’s
    78
    all else constant in respondent’s DCF analysis, the difference between using these
    two reinvestment rates yields a huge $23.90 per share difference in Solera’s
    valuation.379
    Another notable area of disagreement in the DCF models is Solera’s return on
    invested capital (“ROIC”) in the terminal period. Respondent assumed, consistent
    with “a theory this court has repeatedly cited with approval,”380 that in the long run
    the present value of Solera’s growth opportunities would disappear due to increased
    competition, so the Company’s ROIC would gradually converge with its weighted
    average costs of capital (“WACC”).381 Petitioners disagree with applying the
    convergence model to Solera. They contend that the Company possesses “moats”
    around its business, such as barriers to entry, competitive advantages, and market
    required maintenance investment into perpetuity. Resp’t’s Post-Trial Opening Br. 47, 51-
    52.
    379
    Tr. 103; JX0900.0007-08.
    380
    PetSmart, 
    2017 WL 2303599
    , at *39; see also In re John Q. Hammons Hotels Inc.
    S'holder Litig., 
    2011 WL 227634
    , at *4 n.16 (Del. Ch. Jan. 14, 2011) (stating that the
    convergence model is “a reflection of the widely-accepted assumption that for companies
    in highly competitive industries with no competitive advantages, value-creating investment
    opportunities will be exhausted over a discrete forecast period, and beyond that point, any
    additional growth will be value-neutral,” leading to “return on new investment in perpetuity
    [that] converge[s] to the company's cost of capital”); Cede & Co. v. Technicolor, Inc., 
    1990 WL 161084
    , at *26 (Del. Ch. Oct. 19, 1990) (discussing that “profits above the cost of
    capital in an industry will attract competitors, who will over some time period drive returns
    down to the point at which returns equal the cost of capital”), aff'd in part and rev'd in part
    on other grounds, 
    634 A.2d 345
    (Del. 1993).
    381
    Tr. 1085-87 (Hubbard).
    79
    dominance, that will give it perpetual advantages over potential competitors.382
    Petitioners thus argue that Solera will earn a return of 4.5% above its WACC in
    perpetuity during the terminal period.383 When the court asked petitioner’s expert
    how he landed on 4.5%, his response was candid: “It’s a little bit of a finger in the
    wind.”384
    The parties also disagree about how to account for stock-based compensation
    (“SBC”) in their DCF models, both for the discrete period and the terminal period.
    Respondent applied the “cash basis” method to stock-based compensation expense,
    using the cash amount that the Company would have to spend to account for SBC as
    a normalized percentage of revenue.385 Petitioners did not independently calculate
    SBC and instead used the Company’s projections.386           These projections were
    calculated on a book basis, benchmarked to Solera’s actual stock price, and assumed
    to grow at 5% annually.387
    The parties also handled the contingent tax liability attached to Solera’s
    foreign earnings very differently. As of the Merger, the Company had earned
    382
    JX0900.0028, 32.
    383
    JX0900.0031.
    384
    Tr. 242-43 (Cornell).
    385
    
    Id. at 1059-60
    (Hubbard); JX0899.0043-44.
    386
    
    Id. at 57
    (Cornell).
    387
    
    Id. at 1060
    (Hubbard).
    80
    approximately $1.2 billion in foreign profits, for which it had only paid taxes where
    those profits were earned.388         Solera historically designated these profits as
    permanently reinvested earnings (“PRE”). Before these earnings can be repatriated
    to the United States or paid to stockholders, the Company must pay the residual tax,
    i.e., the marginal amount between the U.S. tax rate and the amount already paid
    internationally.389 Respondent assumed that $350 million of foreign earnings that
    had been de-designated as PRE would be repatriated as of the Merger had there not
    been a deal, and that the rest of Solera’s foreign profits, both past and future, would
    be repatriated on a rolling basis following a five-year deferral period.390 This
    repatriation would cause Solera to pay more in taxes, decreasing the Company’s
    value. Petitioners, by contrast, assumed that such taxes would never be paid because
    they contend the timing of repatriation is unknown and thus these tax liabilities are
    speculative.391
    Finally, the parties disagreed about the amount of cash to be added back to
    Solera’s enterprise value in order to convert it to equity value. This court has
    repeatedly held that only “excess cash” is to be added back.392             Solera had
    388
    
    Id. at 692-93
    (Giger).
    389
    
    Id. at 1094-97
    (Hubbard).
    390
    
    Id. at 1094-98
    (Hubbard).
    391
    
    Id. at 70-75
    (Cornell); JX0900.0040-42.
    392
    See, e.g., In re Appraisal of SWS Grp., Inc., 
    2017 WL 2334852
    , at *15 (Del. Ch. May
    30, 2017) (citation omitted) (“It is true as a matter of valuation methodology that non-
    81
    approximately $480 million of cash at closing.393 During the sales process, the
    Company’s CFO did a country-by-country analysis and determined that Solera
    needed $160 million to $165 million to fund its operations.394 Respondent used that
    analysis to deduct $165 million from the Company’s $480 million of cash at closing
    and added back the difference, i.e., $315 million.395 Petitioners, on the other hand,
    added back all of the $480 million, reasoning that “with modern computer
    technology, a good CFO doesn’t need any wasting cash,” and that “it would require
    an incompetent corporate treasurer for a big chunk of the cash balance to be wasting
    cash.”396
    *****
    There are other points of disagreement in the parties’ DCF models, but it is
    not necessary to detail them here. As explained above, the Merger price was the
    product of “an open process, informed by robust public information, and easy access
    to deeper, non-public information, in which many parties with an incentive to make
    a profit had a chance to bid.”397 Given the huge gap between petitioners’ DCF
    operating assets—including cash in excess of that needed to fund the operations of the
    entity—are to be added to a DCF analysis.”).
    393
    Tr. 229 (Cornell).
    394
    
    Id. at 695
    (Giger).
    395
    JX0894.0103; Tr. 1092-94 (Hubbard).
    396
    Tr. 67-68 (Cornell).
    397
    
    DFC, 172 A.3d at 349
    .
    82
    valuation and the Merger price, which I have found to be a reliable indicator of value
    in accordance with the teachings of DFC and Dell, I find petitioners’ DCF valuation
    not to be credible on its face and accord it no weight.398
    My decision to do so is corroborated by the fact that nearly 88% of petitioners’
    enterprise valuation is attributable to periods after the five-year Hybrid Case
    Projections.399 In other words, petitioners’ DCF valuation is largely a prediction
    about the Company’s operations many years into the future. Such predictions, even
    when informed, are unavoidably speculative, where small variances in a DCF’s
    inputs can lead to wide valuation swings.400
    I also give no weight to respondent’s DCF valuation, but for a different reason.
    Although that valuation is close to my Merger price less synergies calculation,
    respondent’s own expert opined that his DCF valuation is “less reliable” than the
    398
    See 
    Dell, 177 A.3d at 35
    (“When . . . an appraisal is brought in cases like this where a
    robust sale process [involving willing buyers with thorough information and the time to
    make a bid] in fact occurred, the Court of Chancery should be chary about imposing the
    hazards that always come when a law-trained judge is forced to make a point estimate of
    fair value based on widely divergent partisan expert testimony.”); 
    DFC, 172 A.3d at 379
    (“Simply given the Court of Chancery’s own findings about the extensive market check,
    the value gap already reflected in the court’s original discounted cash flow estimate of
    $13.07 should have given the Court doubts about the reliability of its discounted cash flow
    analysis.”).
    399
    JX0898.0124.
    400
    See 
    Dell, 177 A.3d at 37-38
    (“Although widely considered the best tool for valuing
    companies when there is no credible market information and no market check, DFC
    valuations involve many inputs—all subject to disagreement by well-compensated and
    highly credentialed experts—and even slight differences in these inputs can produce large
    valuation gaps.”).
    83
    Merger price minus synergies valuation “given the uncertainties . . . surrounding
    several inputs to the DCF valuation.”401 I agree, and will accord the value of the
    Merger price minus synergies dispositive weight in this case.402
    5.    Respondent’s Unaffected Stock Price Argument is
    Unavailing
    In the wake of our Supreme Court’s decisions in DFC and Dell, the Court of
    Chancery determined in Aruba that the fair value of petitioners’ shares in an
    appraisal proceeding was the thirty-day average unaffected market price of the
    company’s shares, i.e., $17.13 per share.403 In reaching this conclusion, Vice
    Chancellor Laster declined to adopt his deal price ($24.67 per share) less synergies
    figure of $18.20 per share because of his concerns that this figure (i) “likely was
    tainted by human error,” and (ii) “continues to incorporate an element of value
    derived from the merger itself: the value that the acquirer creates by reducing agency
    costs.”404
    In its supplemental brief, respondent argues that, “in light of recent cases, the
    best evidence of Solera’s fair value is its unaffected stock price of $36.39 per
    401
    JX0894.0126.
    402
    Given my conclusion to accord no weight to either side’s DCF model, there is no need
    to retain a court-appointed expert to resolve the parties’ disagreement concerning the
    appropriate method to determine the investment rate for the terminal period.
    403
    Aruba, 
    2018 WL 922139
    , at *1, 4.
    404
    
    Id. at *2
    -3.
    84
    share.”405 This argument, which advocates for a fair value determination about 35%
    below the deal price, reflects a dramatic change of position that I find as facially
    incredible as petitioners’ DCF model. Before, during, and after trial (until Aruba
    was decided), respondent and its highly credentialed expert—a former chairman of
    the President’s Council of Economic Advisors406—consistently asserted that the
    “market-generated Merger price, adjusted for synergies” of $53.95 per share is the
    “best evidence of Solera’s value” as of the date the Merger.407       For the reasons
    explained above, the court independently has come to the same conclusion.
    Notably, nothing prevented respondent from advancing at trial the “unaffected
    market price” argument the Aruba court embraced. The scholarship underpinning
    the notion that both synergies and agency costs are elements of value derived from
    a merger that should be excluded under Section 262(h) has been in the public domain
    for many years and was readily available when this case was tried.408 Yet respondent
    405
    Resp’t’s Suppl. Post-Trial Br. 5.
    406
    Tr. 1023 (Hubbard).
    407
    Resp’t’s Post-Trial Opening Br. 1 (emphasis added).
    408
    Aruba, 
    2018 WL 922139
    , at *3 n.16 (citing William J. Carney & Mark Heimendinger,
    Appraising the Nonexistent: The Delaware Court's Struggle with Control Premiums, 152
    U. PA. L. REV. 845, 847–48, 857–58, 861–66 (2003); Lawrence A. Hamermesh & Michael
    L. Wachter, Rationalizing Appraisal Standards in Compulsory Buyouts, 50 B.C. L. REV.
    1021, 1023–24, 1034–35, 1044, 1046–54, 1067 (2009); Lawrence A. Hamermesh &
    Michael L. Wachter, The Short and Puzzling Life of the “Implicit Minority Discount” in
    Delaware Appraisal Law, 156 U. PA. L. REV. 1, 30–36, 49, 52, 60 (2007); Lawrence A.
    Hamermesh & Michael L. Wachter, The Fair Value of Cornfields in Delaware Appraisal
    Law, 31 J. CORP. L. 119, 128, 132–33, 139–42 (2005)).
    85
    made no effort to advance this theory at trial and, thus, petitioners were afforded no
    opportunity to respond to it. In this respect, I agree with the sentiment Vice
    Chancellor Glasscock expressed in a similar situation that “the use of trading price
    to determine fair value requires a number of assumptions that . . . are best made or
    rejected after being subject to a forensic and adversarial presentation by interested
    parties.”409
    As an example, even if one were to accept the legal theory that agency costs
    represent an element of value derived from the merger itself, little exists in the record
    to give the court any comfort about Solera’s true unaffected market price. The
    $36.39 per share figure on which the Company relies represents the closing price on
    a single day, August 3, 2015.410 Although the Company used that date in its proxy
    statement as the unaffected date for purposes of calculating a premium, 411 and I have
    referenced it in this opinion a number of times for context, the parties never litigated
    the issue of Solera’s unaffected market price and the court is in no position based on
    the trial record to reliably make such a determination.
    With respect to the merits of the theory that agency costs represent an element
    of value derived from the merger itself, the Aruba court explained that the “concept
    409
    AOL, 
    2018 WL 1037450
    , at *10 n.118.
    410
    PTO ¶ 79 & Ex. A.
    411
    
    Id. ¶ 363.
                                                86
    of reduced agency costs is the flipside of the benefits of control,” with the “key
    point” being that “control creates value distinct from synergy value.” 412 This is
    because, as Professors Hamermesh and Wachter explain, “the aggregation of the
    shares is value-creating because a controller can then exercise the control rights
    involving directing the strategy and managing the firm.”413 They go on to argue that
    the “normative justification for awarding the value of control to the controller
    parallels the rationale for awarding the value of synergies to the bidder. Efficiency
    requires that those who create an efficient transaction—either through creating
    synergies or eliminating agency costs—should receive the value that they create.”414
    Significantly, however, a number of this court’s appraisal decisions, one of
    which was affirmed in relevant part on appeal, suggest that the value of control is
    properly part of the going concern and not an element of value that must be excised
    under Section 262(h).415 In Le Beau v. M.G. Bancorporation., Inc., for example,
    respondent used a “capital market” approach that “involved deriving various pricing
    multiples from selected publicly-traded companies, and then applying those
    412
    Aruba, 
    2018 WL 922139
    , at *3 n.17 (citations omitted).
    413
    Lawrence A. Hamermesh & Michael L. Wachter, Rationalizing Appraisal Standards in
    Compulsory Buyouts, 50 B.C. L. REV. 1021, 1052 (2009).
    414
    
    Id. 415 See
    id. (“Finally, do 
    minority shareholders receive the value of control that is created
    by the aggregation of the shares and the creation of a new controller? . . . Embracing the
    concept of an ‘implicit minority discount,’ the courts would award the dissenters [the value
    of control], on the theory that fair value should not be reduced for lack of control.”).
    87
    multiples to MGB,” the target corporation.416 Then-Vice Chancellor Jacobs rejected
    the methodology because it “results in a minority valuation.”417 The Supreme Court
    affirmed this determination, explaining that the trial court’s conclusion that the
    “capital market approach contained an inherent minority discount that made its use
    legally impermissible in a statutory appraisal proceeding [was] fully supported by
    the record evidence that was before the Court of Chancery and the prior holdings of
    this Court construing Section 262.”418
    Similarly, in Borruso v. Communications Telesystems International, Vice
    Chancellor Lamb held that “a control premium should be added to adjust the market
    value of the equity derived from the comparable company method.”419 The court
    explained it reasoning as follows:
    [T]he comparable company method of analysis produces an equity
    valuation that inherently reflects a minority discount, as the data used
    for purposes of comparison is all derived from minority trading values
    of the comparable companies. Because that value is not fully reflective
    of the intrinsic worth of the corporation on a going concern basis, this
    court has applied an explicit control premium in calculating the fair
    value of the equity in an appraisal proceeding.420
    416
    
    1998 WL 44993
    , at *7 (Del. Ch. Jan. 29, 1998), aff’d in part and remanded in part, 
    737 A.2d 513
    .
    417
    
    Id. at *8.
    418
    M.G. Bancorporation., Inc., v. Le 
    Beau, 737 A.2d at 523
    (citation omitted).
    419
    
    753 A.2d 451
    , 452 (Del. Ch. 1999).
    420
    
    Id. at 458.
                                                  88
    More recently, then-Vice Chancellor Strine took the same approach in
    Andaloro v. PFPC Worldwide, Inc.421                There, the court approved adjusting a
    comparable companies analysis by adding a control premium where “[w]hat is being
    corrected for is the difference between the trading price of a minority share and the
    trading price if all the shares were sold.”422
    Our Supreme Court held long ago that the going concern value of a company
    must be determined in an appraisal case “irrespective of the synergies involved in a
    merger.”423 DFC and Dell both make the same point.424 Although DFC and Dell
    are transformative decisions in my view in their full-throated endorsement of
    applying market efficiency principles in appraisal actions,425 I do not read those
    decisions—both of which unmistakably emphasize the probative value of deal
    price426—to suggest that agency costs represent an element of value attributable to a
    421
    
    2005 WL 2045640
    (Del. Ch. Aug. 19, 2005).
    422
    
    Id. at *18
    (citing Borruso, 
    753 A.2d 451
    ).
    423
    See 
    Gilbert, 731 A.2d at 797
    (“[S]ection 262(h) requires that the Court of Chancery
    discern the going concern value of the company irrespective of the synergies involved in a
    merger.”).
    424
    
    Dell, 177 A.3d at 21
    ; 
    DFC, 172 A.3d at 371
    .
    425
    See Aruba., 
    2018 WL 2315943
    , at *8 & n.61 (reargument decision) (comparing DFC
    and Dell to how past “Supreme Court decisions had treated the unaffected trading price as
    a valuation indicator”).
    426
    
    Dell, 177 A.3d at 30
    (“Overall, the weight of evidence shows that Dell’s deal price has
    heavy, if not overriding, probative value.”); 
    DFC, 172 A.3d at 349
    (“[E]conomic principles
    suggest that the best evidence of fair value was the deal price.”).
    89
    merger separate from synergies that must be excluded under Section 262(h). Had
    that been the Supreme Court’s intention, I believe it would have said so explicitly.
    Accordingly, I reject respondent’s newly-minted argument that Solera’s
    closing price on August 3, 2015 of $36.39 is the best evidence of Solera’s fair value
    as of the date of the Merger.
    IV.      CONCLUSION
    For the reasons explained above, petitioners are entitled to $53.95 per share
    as the fair value of their shares of Solera, plus interest accruing from the date the
    Merger closed, March 3, 2016, at the rate of 5% percent over the Federal Reserve
    discount rate from time to time, compounded quarterly.427
    The parties should confer and submit a form of implementing order for the
    entry of final judgment consistent with this opinion within ten business days. It is
    the court’s intention to unseal the expert reports in this case in their entirety upon
    entry of a final judgment. If, however, a party believes good cause exists to maintain
    any portion of any of the expert reports under seal, that party must file a motion
    within ten business days identifying the specific part that warrants further
    confidential treatment and explaining the basis for continuing such treatment.
    IT IS SO ORDERED.
    427
    
    8 Del. C
    . § 262(h).
    90