Loading
Technology
15 min read
Areas of Expertise :
Corporate Governance, Mergers And Acquisitions, Executive Compensation
Published Date:
Last Modified Date:
Jurisdiction:
Delaware State
Vista Equity Partners acquired Mindbody, Inc. in a take-private merger for $36.50 per share. Mindbody signed the merger agreement on December 23, 2018, announced the transaction the following day, obtained stockholder approval on February 14, 2019, and completed the acquisition on February 15, 2019. Mindbody stockholders later pursued consolidated claims in the Delaware Court of Chancery under C.A. No. 2019-0442-KSJM, challenging founder and Chief Executive Officer Richard Stollmeyer’s communications with Vista, his interests during the sale process, the information provided to Mindbody’s board, and omissions in the merger proxy.
On March 15, 2023, the Court of Chancery found that Stollmeyer breached his fiduciary duty of loyalty under Revlon by favoring Vista while pursuing liquidity and continued-employment interests that the board did not fully understand. The damages dispute involved Business analysis of the transaction price Vista would have paid in a sale process unaffected by Stollmeyer’s conduct. On December 2, 2024, the Delaware Supreme Court affirmed Stollmeyer’s Revlon breach, the related $1-per-share transaction-price damages, and the disclosure-breach finding. The Court reversed the judgment that Vista aided and abetted the disclosure violation because the trial record did not establish knowing participation through active or substantial assistance.
On August 7, 2018, Stollmeyer met with Qatalyst Partners banker Jeff Chang and expressed greater willingness than before to speak with private-equity firms. During the discussion, he identified Vista and Thoma Bravo as firms that had previously expressed interest in Mindbody. Immediately after the meeting, Chang reconnected Stollmeyer with Vista principal Monti Saroya by email.
Stollmeyer met with Saroya and Vista Senior Vice President Nicolas Stahl on September 4, 2018. According to a contemporaneous Vista summary, Stollmeyer wanted to find a good home for Mindbody, was growing tired of his role, and expected to remain chief executive officer for another two or three years. At the time, he lacked board authorization to explore a sale or disclose succession information to Vista. His later report to the board did not provide a complete account of the meeting.
During Vista’s executive summit on October 8 and 9, 2018, Stollmeyer met executives from Vista portfolio companies and attended presentations about Vista’s operating model. He asked to speak with a founder who had sold a company to Vista and briefly presented Mindbody to Vista founder Robert F. Smith on October 9. In evaluating Stollmeyer’s interests during the sale process, the Court of Chancery later considered both his favorable response to the summit and his continued communications with Vista.
Saroya called Stollmeyer on October 15 and conveyed an oral expression of interest in acquiring Mindbody. Vista indicated that it could pay a substantial premium over the company’s recent trading price and viewed the stock decline as a potential acquisition opportunity. Two days later, Stollmeyer informed certain members of management, but the full board did not immediately receive a complete account of Vista’s proposal or the surrounding communications. Meanwhile, Vista began preparing to move quickly before Mindbody opened a formal sale process.
At an October 26 meeting, Mindbody’s board discussed Vista’s expression of interest and the possible formation of a transaction committee. The board formally created the committee by unanimous written consent on October 30 and appointed Eric Liaw, Gail Goodman, and Court Cunningham, with Liaw serving as chair. The following day, the committee adopted guidelines requiring authorization for outbound management communications with potential buyers and prompt reporting of buyer interest and possible conflicts. Those guidelines were distributed to the board on November 2, and Stollmeyer received and reviewed them.
Following Mindbody’s November 6 earnings call and the resulting stock-price decline, Saroya contacted Chang about the company. Chang told Vista that Stollmeyer wanted at least $40 per share. On November 10, Stollmeyer contacted Saroya and disclosed that Mindbody would be conducting a sale process, despite the committee’s restrictions on unauthorized outbound communications. As a result, Vista obtained information about price expectations and process timing before the formal outreach to financial buyers.
The transaction committee interviewed Centerview Partners and Qatalyst Partners on November 14 as possible financial advisors. After the presentations, the committee authorized Mindbody to engage Qatalyst. The advisor planned to contact strategic buyers beginning November 19 and financial sponsors beginning November 30. Vista, however, already knew that a sale process was being prepared. Qatalyst formally contacted Vista on November 30 and reached out to other financial sponsors on December 3 and 4.
When Mindbody opened its electronic data room on December 15, seven potential buyers had signed nondisclosure agreements and received access. Although each party received the same company materials, Vista entered formal diligence after conducting outside research and obtaining earlier information about Stollmeyer’s price expectations and the expected transaction schedule. On December 18, Vista submitted a proposal of $35 per share with a 24-hour deadline. At that point, Vista was prepared to make a firm offer while several other potential buyers remained in earlier stages of diligence.
Mindbody’s board authorized Qatalyst to counter Vista’s proposal at $40 per share on December 20. Vista then raised its bid to $36.50 and characterized the proposal as its best and final offer, even though the trial record indicated that it had room to bid above its initial $35 proposal. Hellman & Friedman remained involved but had not submitted an offer and advised that it needed more time to complete a transaction. On December 21, the board directed management to accept Vista’s proposal and negotiate the merger agreement.
Mindbody’s board approved the merger agreement, and the parties signed it on December 23, 2018. Under the agreement, each outstanding share of Mindbody common stock would be converted into the right to receive $36.50 in cash, subject to appraisal rights. The transaction was publicly announced on December 24. Stollmeyer and Institutional Venture Partners also agreed to vote shares representing approximately 32.1 percent of Mindbody’s voting power in favor of the merger.
The merger agreement provided for a 30-day go-shop period beginning after the transaction announcement. During that period, Qatalyst contacted 52 potential buyers, including 38 that had not participated in the earlier process. Eight parties signed nondisclosure agreements and received management presentations, but only two proceeded with additional diligence. No competing proposal was submitted before the go-shop period expired.
Mindbody filed its preliminary proxy on January 9 and its definitive proxy on January 23. The filings did not fully describe Stollmeyer’s September meeting with Vista, his statements about finding a new owner, his response to Vista’s operating model, or several communications involving price and timing. Supplemental disclosures filed on February 7 added information about the transaction process but continued to describe earlier events incompletely. The courts later determined that the proxy materials contained three partial omissions and four complete omissions that were material when considered together.
At a special meeting on February 14, 2019, Mindbody stockholders approved the merger. Vista completed the acquisition the next day. After closing, the stockholder claims proceeded as an action seeking monetary relief. The remaining dispute concerned Stollmeyer’s conduct, the board’s supervision of the transaction process, the proxy disclosures, and Vista’s alleged role in the disclosure breach.
Trial took place in the Court of Chancery from February 28 through March 9, 2022. Executives, directors, bankers, advisors, and retained experts testified. The record included emails, text messages, calendars, board materials, financial analyses, negotiation documents, and communications involving Stollmeyer, Vista, Mindbody directors, and transaction advisors. By the time of trial, Stollmeyer and Vista were the remaining defendants.
On June 8, 2022, the Court of Chancery granted final approval to a $27 million cash settlement involving director Eric Liaw and entities affiliated with Institutional Venture Partners. The agreement resolved the class claims against those defendants without an admission of liability. Litigation continued against Stollmeyer and Vista. The partial settlement later prompted a dispute over whether the remaining defendants could reduce any final judgment by the settlement amount.
Post-trial briefing concluded on July 14, 2022, and the Court of Chancery heard argument on July 28. The parties later submitted a joint schedule of evidence. With the trial record complete, the court considered the transaction process, management interests, board supervision, proxy disclosures, Vista’s alleged secondary liability, and damages. Its post-trial opinion was issued in March 2023.
In its March 15, 2023 post-trial opinion, the Court of Chancery found that Stollmeyer breached his duty of loyalty under Revlon by favoring Vista while pursuing liquidity and continued-employment interests. The court also determined that he gave Vista informational and timing advantages before the formal process and withheld material information from the directors overseeing the transaction. Based on the evidence, the court found that Vista would have paid $37.50 per share in a process unaffected by Stollmeyer’s conduct and awarded the stockholder class $1 per share in compensatory damages. It separately found that Stollmeyer breached his fiduciary duty of disclosure and that Vista aided and abetted that breach, while limiting the class to a single $1-per-share recovery.
Stollmeyer and Vista sought to reduce the judgment by the $27 million partial settlement under the Delaware Uniform Contribution Among Tortfeasors Act. The Court of Chancery rejected the defense on November 15, 2023, holding that it had been waived because the defendants did not raise it adequately before trial. Their argument first appeared in the final footnote on the final page of their last post-trial brief. According to the court, that delay deprived the plaintiffs of sufficient notice and a fair opportunity to address joint-liability issues during trial.
The Delaware Supreme Court affirmed the finding that Stollmeyer breached his duty of loyalty under Revlon and upheld the $1-per-share transaction-price award. Although the Court expressed reservations about the limited evidentiary support for the precise $37.50 figure, it concluded that the Court of Chancery had not abused its discretion in awarding $1 per share. The finding that Stollmeyer breached his fiduciary duty of disclosure was also affirmed because the proxy materials contained material omissions.
Vista obtained a different result on appeal. The Supreme Court reversed the aiding-and-abetting judgment, concluding that Vista’s knowledge of the underlying events, its contractual right to review and comment on the proxy, and its failure to request corrections did not establish knowing participation through active or substantial assistance. Because the class was entitled to only one $1-per-share recovery and the Revlon award remained intact, the Court did not decide whether a separate disclosure-damages award was independently available. It also affirmed the ruling that the settlement-credit defense had been waived.
Approximately $67.72 million was transferred on December 11, 2024, in satisfaction of the damages judgment. The plaintiffs then asked the Court of Chancery to combine the net judgment fund with the remaining net proceeds from the $27 million Liaw and Institutional Venture Partners settlement. On January 14, 2025, the court approved the combined distribution plan with modifications. The resulting process included both settlement proceeds and judgment proceeds.
The settlement administrator reported distributions from the combined funds on February 6 and October 6, 2025. According to the administrator, additional payments could occur on a rolling basis if funds remained available. These were post-judgment distribution events carried out under the court-approved plan. They did not create new findings of liability or impose additional judgments against Stollmeyer or Vista.
Court:
Delaware Court of Chancery
Case Name:
In re Mindbody, Inc. Stockholder Litigation
Business mergers
Valuation
Damages Calculations
Proxy Advisory
Acquisition
Private equity funds
Shareholder Disputes
Corporate Finance
Vista Equity Partners acquired Mindbody, Inc. in a take-private merger for $36.50 per share. Mindbody signed the merger agreement on December 23, 2018, announced the transaction the following day, obtained stockholder approval on February 14, 2019, and completed the acquisition on February 15, 2019. Mindbody stockholders later pursued consolidated claims in the Delaware Court of Chancery under C.A. No. 2019-0442-KSJM, challenging founder and Chief Executive Officer Richard Stollmeyer’s communications with Vista, his interests during the sale process, the information provided to Mindbody’s board, and omissions in the merger proxy.
On March 15, 2023, the Court of Chancery found that Stollmeyer breached his fiduciary duty of loyalty under Revlon by favoring Vista while pursuing liquidity and continued-employment interests that the board did not fully understand. The damages dispute involved Business analysis of the transaction price Vista would have paid in a sale process unaffected by Stollmeyer’s conduct. On December 2, 2024, the Delaware Supreme Court affirmed Stollmeyer’s Revlon breach, the related $1-per-share transaction-price damages, and the disclosure-breach finding. The Court reversed the judgment that Vista aided and abetted the disclosure violation because the trial record did not establish knowing participation through active or substantial assistance.
On August 7, 2018, Stollmeyer met with Qatalyst Partners banker Jeff Chang and expressed greater willingness than before to speak with private-equity firms. During the discussion, he identified Vista and Thoma Bravo as firms that had previously expressed interest in Mindbody. Immediately after the meeting, Chang reconnected Stollmeyer with Vista principal Monti Saroya by email.
Stollmeyer met with Saroya and Vista Senior Vice President Nicolas Stahl on September 4, 2018. According to a contemporaneous Vista summary, Stollmeyer wanted to find a good home for Mindbody, was growing tired of his role, and expected to remain chief executive officer for another two or three years. At the time, he lacked board authorization to explore a sale or disclose succession information to Vista. His later report to the board did not provide a complete account of the meeting.
During Vista’s executive summit on October 8 and 9, 2018, Stollmeyer met executives from Vista portfolio companies and attended presentations about Vista’s operating model. He asked to speak with a founder who had sold a company to Vista and briefly presented Mindbody to Vista founder Robert F. Smith on October 9. In evaluating Stollmeyer’s interests during the sale process, the Court of Chancery later considered both his favorable response to the summit and his continued communications with Vista.
Saroya called Stollmeyer on October 15 and conveyed an oral expression of interest in acquiring Mindbody. Vista indicated that it could pay a substantial premium over the company’s recent trading price and viewed the stock decline as a potential acquisition opportunity. Two days later, Stollmeyer informed certain members of management, but the full board did not immediately receive a complete account of Vista’s proposal or the surrounding communications. Meanwhile, Vista began preparing to move quickly before Mindbody opened a formal sale process.
At an October 26 meeting, Mindbody’s board discussed Vista’s expression of interest and the possible formation of a transaction committee. The board formally created the committee by unanimous written consent on October 30 and appointed Eric Liaw, Gail Goodman, and Court Cunningham, with Liaw serving as chair. The following day, the committee adopted guidelines requiring authorization for outbound management communications with potential buyers and prompt reporting of buyer interest and possible conflicts. Those guidelines were distributed to the board on November 2, and Stollmeyer received and reviewed them.
Following Mindbody’s November 6 earnings call and the resulting stock-price decline, Saroya contacted Chang about the company. Chang told Vista that Stollmeyer wanted at least $40 per share. On November 10, Stollmeyer contacted Saroya and disclosed that Mindbody would be conducting a sale process, despite the committee’s restrictions on unauthorized outbound communications. As a result, Vista obtained information about price expectations and process timing before the formal outreach to financial buyers.
The transaction committee interviewed Centerview Partners and Qatalyst Partners on November 14 as possible financial advisors. After the presentations, the committee authorized Mindbody to engage Qatalyst. The advisor planned to contact strategic buyers beginning November 19 and financial sponsors beginning November 30. Vista, however, already knew that a sale process was being prepared. Qatalyst formally contacted Vista on November 30 and reached out to other financial sponsors on December 3 and 4.
When Mindbody opened its electronic data room on December 15, seven potential buyers had signed nondisclosure agreements and received access. Although each party received the same company materials, Vista entered formal diligence after conducting outside research and obtaining earlier information about Stollmeyer’s price expectations and the expected transaction schedule. On December 18, Vista submitted a proposal of $35 per share with a 24-hour deadline. At that point, Vista was prepared to make a firm offer while several other potential buyers remained in earlier stages of diligence.
Mindbody’s board authorized Qatalyst to counter Vista’s proposal at $40 per share on December 20. Vista then raised its bid to $36.50 and characterized the proposal as its best and final offer, even though the trial record indicated that it had room to bid above its initial $35 proposal. Hellman & Friedman remained involved but had not submitted an offer and advised that it needed more time to complete a transaction. On December 21, the board directed management to accept Vista’s proposal and negotiate the merger agreement.
Mindbody’s board approved the merger agreement, and the parties signed it on December 23, 2018. Under the agreement, each outstanding share of Mindbody common stock would be converted into the right to receive $36.50 in cash, subject to appraisal rights. The transaction was publicly announced on December 24. Stollmeyer and Institutional Venture Partners also agreed to vote shares representing approximately 32.1 percent of Mindbody’s voting power in favor of the merger.
The merger agreement provided for a 30-day go-shop period beginning after the transaction announcement. During that period, Qatalyst contacted 52 potential buyers, including 38 that had not participated in the earlier process. Eight parties signed nondisclosure agreements and received management presentations, but only two proceeded with additional diligence. No competing proposal was submitted before the go-shop period expired.
Mindbody filed its preliminary proxy on January 9 and its definitive proxy on January 23. The filings did not fully describe Stollmeyer’s September meeting with Vista, his statements about finding a new owner, his response to Vista’s operating model, or several communications involving price and timing. Supplemental disclosures filed on February 7 added information about the transaction process but continued to describe earlier events incompletely. The courts later determined that the proxy materials contained three partial omissions and four complete omissions that were material when considered together.
At a special meeting on February 14, 2019, Mindbody stockholders approved the merger. Vista completed the acquisition the next day. After closing, the stockholder claims proceeded as an action seeking monetary relief. The remaining dispute concerned Stollmeyer’s conduct, the board’s supervision of the transaction process, the proxy disclosures, and Vista’s alleged role in the disclosure breach.
Trial took place in the Court of Chancery from February 28 through March 9, 2022. Executives, directors, bankers, advisors, and retained experts testified. The record included emails, text messages, calendars, board materials, financial analyses, negotiation documents, and communications involving Stollmeyer, Vista, Mindbody directors, and transaction advisors. By the time of trial, Stollmeyer and Vista were the remaining defendants.
On June 8, 2022, the Court of Chancery granted final approval to a $27 million cash settlement involving director Eric Liaw and entities affiliated with Institutional Venture Partners. The agreement resolved the class claims against those defendants without an admission of liability. Litigation continued against Stollmeyer and Vista. The partial settlement later prompted a dispute over whether the remaining defendants could reduce any final judgment by the settlement amount.
Post-trial briefing concluded on July 14, 2022, and the Court of Chancery heard argument on July 28. The parties later submitted a joint schedule of evidence. With the trial record complete, the court considered the transaction process, management interests, board supervision, proxy disclosures, Vista’s alleged secondary liability, and damages. Its post-trial opinion was issued in March 2023.
In its March 15, 2023 post-trial opinion, the Court of Chancery found that Stollmeyer breached his duty of loyalty under Revlon by favoring Vista while pursuing liquidity and continued-employment interests. The court also determined that he gave Vista informational and timing advantages before the formal process and withheld material information from the directors overseeing the transaction. Based on the evidence, the court found that Vista would have paid $37.50 per share in a process unaffected by Stollmeyer’s conduct and awarded the stockholder class $1 per share in compensatory damages. It separately found that Stollmeyer breached his fiduciary duty of disclosure and that Vista aided and abetted that breach, while limiting the class to a single $1-per-share recovery.
Stollmeyer and Vista sought to reduce the judgment by the $27 million partial settlement under the Delaware Uniform Contribution Among Tortfeasors Act. The Court of Chancery rejected the defense on November 15, 2023, holding that it had been waived because the defendants did not raise it adequately before trial. Their argument first appeared in the final footnote on the final page of their last post-trial brief. According to the court, that delay deprived the plaintiffs of sufficient notice and a fair opportunity to address joint-liability issues during trial.
The Delaware Supreme Court affirmed the finding that Stollmeyer breached his duty of loyalty under Revlon and upheld the $1-per-share transaction-price award. Although the Court expressed reservations about the limited evidentiary support for the precise $37.50 figure, it concluded that the Court of Chancery had not abused its discretion in awarding $1 per share. The finding that Stollmeyer breached his fiduciary duty of disclosure was also affirmed because the proxy materials contained material omissions.
Vista obtained a different result on appeal. The Supreme Court reversed the aiding-and-abetting judgment, concluding that Vista’s knowledge of the underlying events, its contractual right to review and comment on the proxy, and its failure to request corrections did not establish knowing participation through active or substantial assistance. Because the class was entitled to only one $1-per-share recovery and the Revlon award remained intact, the Court did not decide whether a separate disclosure-damages award was independently available. It also affirmed the ruling that the settlement-credit defense had been waived.
Approximately $67.72 million was transferred on December 11, 2024, in satisfaction of the damages judgment. The plaintiffs then asked the Court of Chancery to combine the net judgment fund with the remaining net proceeds from the $27 million Liaw and Institutional Venture Partners settlement. On January 14, 2025, the court approved the combined distribution plan with modifications. The resulting process included both settlement proceeds and judgment proceeds.
The settlement administrator reported distributions from the combined funds on February 6 and October 6, 2025. According to the administrator, additional payments could occur on a rolling basis if funds remained available. These were post-judgment distribution events carried out under the court-approved plan. They did not create new findings of liability or impose additional judgments against Stollmeyer or Vista.
Executive Compensation Expert Witness (Defense)
Stollmeyer presented executive-compensation expert Kevin Murphy to support his position that he did not need liquidity in early 2018. Murphy reviewed Stollmeyer’s financial decisions during the five years preceding the merger and acknowledged that Stollmeyer faced substantial cash demands and frequently relied on a line of credit to pay expenses.
Valuation and Damages Expert Witness
Valuation and damages experts are often engaged to examine whether alleged sale-process misconduct affected the transaction price and, if so, by how much. Their work may compare management projections, transaction analyses, market data, negotiation records, and the price a buyer may have paid in a process unaffected by the alleged breach.
Corporate Governance Expert Witness
Corporate governance experts may be engaged in merger litigation to examine how directors and transaction committees supervised a sale process. Their analysis may address committee authority, meeting procedures, management communication rules, documentation practices, and whether directors received the information needed to evaluate transaction decisions.
Business Expert Witness
Business experts may be engaged in merger litigation to examine corporate decision-making, transaction processes, management incentives, and the commercial factors affecting negotiations. Their analysis may address buyer communications, board oversight, competitive bidding, acquisition strategy, and whether business considerations influenced the timing or terms of a proposed transaction.
Record Buyer Communications From the First Contact
Executives and transaction advisors should document buyer contacts beginning with the first communication. The record should identify who initiated the contact, the subjects discussed, any information exchanged, and when the board or transaction committee received notice.
Early records should also distinguish routine investor discussions from communications concerning a possible acquisition. That distinction can become difficult to establish after discussions progress into price, timing, succession, employment, liquidity, rollover equity, or transaction structure.
Establish Written Rules for Management Communications
A transaction committee should adopt written limits on management communications with potential buyers. Discussions concerning price, process timing, employment, rollover equity, liquidity, succession, and post-closing roles should be reported to the committee.
The written instructions should identify who may communicate with bidders, which discussions require advance approval, and how unplanned buyer contacts must be reported. Directors should also confirm that executives and advisors understand and follow the instructions.
Provide Complete Conflict Information to the Committee
Committee members should receive information about management incentives, investor liquidity goals, buyer preferences, and earlier acquisition discussions before approving a transaction strategy. Information concerning continued employment, expected tenure, personal investments, stock ownership, and possible rollover arrangements should be presented directly to the directors supervising the process.
Updates should continue as negotiations develop. A committee cannot evaluate management recommendations without an accurate account of the interests and communications affecting those recommendations.
Review the Proxy’s Merger Chronology Against the Record
The background-of-the-merger section should be compared against emails, text messages, calendars, board minutes, banker notes, and buyer communications. Descriptions of meetings should address the material substance of the discussions rather than listing only a date and a general subject.
The review should also compare the proxy with the information previously provided to the board. A chronology may remain misleading when it reports individual events but removes the context connecting those events.
Separate Buyer Knowledge From Knowing Participation
Aiding-and-abetting liability requires proof that the buyer knowingly participated in a fiduciary breach through substantial assistance, encouragement, or other wrongful conduct. Vista’s knowledge of omitted facts, its contractual proxy-review rights, and its failure to request corrections did not satisfy that requirement on the trial record.
An acquirer’s awareness of a conflict or disclosure problem does not automatically create liability. The evidence must connect the buyer to active assistance or participation in the fiduciary’s wrongful conduct rather than knowledge and silence alone.
Mindbody’s sale process began with communications between Richard Stollmeyer and Vista before the board formally opened negotiations. Vista received information about Stollmeyer’s price expectations and the timing of the process, conducted substantial outside research, submitted an initial offer of $35 per share, and later increased its proposal to $36.50. Mindbody signed the merger agreement on December 23, 2018, stockholders approved the transaction on February 14, 2019, and Vista completed the acquisition the following day. After a 2022 trial, the Court of Chancery found that Stollmeyer breached his Revlon and disclosure duties and awarded the class $1 per share. The Delaware Supreme Court affirmed Stollmeyer’s liability and the transaction-price award in December 2024 but reversed the aiding-and-abetting judgment against Vista because the evidence did not establish knowing participation through active or substantial assistance. The Court also upheld the waiver of the settlement-credit defense, after which the judgment proceeds and remaining partial-settlement proceeds were combined for court-approved distributions in 2025.
What was the Mindbody-Vista transaction?
Vista Equity Partners acquired Mindbody in a take-private merger for $36.50 per share. The parties signed the merger agreement on December 23, 2018, and completed the acquisition on February 15, 2019.
Why did the Court of Chancery find that Richard Stollmeyer breached his Revlon duties?
The court found that Stollmeyer favored Vista while pursuing liquidity and continued-employment interests. It also found that he gave Vista informational and timing advantages and did not provide the board with a complete account of his contacts and interests.
What information did the Mindbody proxy omit?
The proxy materials did not fully describe Stollmeyer’s early meetings and discussions with Vista, his response to Vista’s ownership model, and communications involving price and process timing. The courts found that three partial omissions and four complete omissions were material when considered together.
How much did the court award in damages?
The Court of Chancery awarded $1 per share in compensatory damages for Stollmeyer’s Revlon breach. The amount represented the difference between the $36.50 merger price and the $37.50 price the court found Vista would have paid in an unaffected process.
Why did the Delaware Supreme Court reverse Vista’s liability?
The evidence did not establish that Vista knowingly participated in Stollmeyer’s disclosure breach through active or substantial assistance. Vista’s knowledge of the underlying events, contractual proxy-review rights, and failure to request corrections were insufficient because Vista had no independent fiduciary duty to Mindbody stockholders.
What happened to the $27 million partial settlement and the damages award?
Executive Compensation Expert Witness (Defense)
Stollmeyer presented executive-compensation expert Kevin Murphy to support his position that he did not need liquidity in early 2018. Murphy reviewed Stollmeyer’s financial decisions during the five years preceding the merger and acknowledged that Stollmeyer faced substantial cash demands and frequently relied on a line of credit to pay expenses.
Valuation and Damages Expert Witness
Valuation and damages experts are often engaged to examine whether alleged sale-process misconduct affected the transaction price and, if so, by how much. Their work may compare management projections, transaction analyses, market data, negotiation records, and the price a buyer may have paid in a process unaffected by the alleged breach.
Corporate Governance Expert Witness
Corporate governance experts may be engaged in merger litigation to examine how directors and transaction committees supervised a sale process. Their analysis may address committee authority, meeting procedures, management communication rules, documentation practices, and whether directors received the information needed to evaluate transaction decisions.
Business Expert Witness
Business experts may be engaged in merger litigation to examine corporate decision-making, transaction processes, management incentives, and the commercial factors affecting negotiations. Their analysis may address buyer communications, board oversight, competitive bidding, acquisition strategy, and whether business considerations influenced the timing or terms of a proposed transaction.
Record Buyer Communications From the First Contact
Executives and transaction advisors should document buyer contacts beginning with the first communication. The record should identify who initiated the contact, the subjects discussed, any information exchanged, and when the board or transaction committee received notice.
Early records should also distinguish routine investor discussions from communications concerning a possible acquisition. That distinction can become difficult to establish after discussions progress into price, timing, succession, employment, liquidity, rollover equity, or transaction structure.
Establish Written Rules for Management Communications
A transaction committee should adopt written limits on management communications with potential buyers. Discussions concerning price, process timing, employment, rollover equity, liquidity, succession, and post-closing roles should be reported to the committee.
The written instructions should identify who may communicate with bidders, which discussions require advance approval, and how unplanned buyer contacts must be reported. Directors should also confirm that executives and advisors understand and follow the instructions.
Provide Complete Conflict Information to the Committee
Committee members should receive information about management incentives, investor liquidity goals, buyer preferences, and earlier acquisition discussions before approving a transaction strategy. Information concerning continued employment, expected tenure, personal investments, stock ownership, and possible rollover arrangements should be presented directly to the directors supervising the process.
Updates should continue as negotiations develop. A committee cannot evaluate management recommendations without an accurate account of the interests and communications affecting those recommendations.
Review the Proxy’s Merger Chronology Against the Record
The background-of-the-merger section should be compared against emails, text messages, calendars, board minutes, banker notes, and buyer communications. Descriptions of meetings should address the material substance of the discussions rather than listing only a date and a general subject.
The review should also compare the proxy with the information previously provided to the board. A chronology may remain misleading when it reports individual events but removes the context connecting those events.
Separate Buyer Knowledge From Knowing Participation
Aiding-and-abetting liability requires proof that the buyer knowingly participated in a fiduciary breach through substantial assistance, encouragement, or other wrongful conduct. Vista’s knowledge of omitted facts, its contractual proxy-review rights, and its failure to request corrections did not satisfy that requirement on the trial record.
An acquirer’s awareness of a conflict or disclosure problem does not automatically create liability. The evidence must connect the buyer to active assistance or participation in the fiduciary’s wrongful conduct rather than knowledge and silence alone.
Mindbody’s sale process began with communications between Richard Stollmeyer and Vista before the board formally opened negotiations. Vista received information about Stollmeyer’s price expectations and the timing of the process, conducted substantial outside research, submitted an initial offer of $35 per share, and later increased its proposal to $36.50. Mindbody signed the merger agreement on December 23, 2018, stockholders approved the transaction on February 14, 2019, and Vista completed the acquisition the following day. After a 2022 trial, the Court of Chancery found that Stollmeyer breached his Revlon and disclosure duties and awarded the class $1 per share. The Delaware Supreme Court affirmed Stollmeyer’s liability and the transaction-price award in December 2024 but reversed the aiding-and-abetting judgment against Vista because the evidence did not establish knowing participation through active or substantial assistance. The Court also upheld the waiver of the settlement-credit defense, after which the judgment proceeds and remaining partial-settlement proceeds were combined for court-approved distributions in 2025.
What was the Mindbody-Vista transaction?
Vista Equity Partners acquired Mindbody in a take-private merger for $36.50 per share. The parties signed the merger agreement on December 23, 2018, and completed the acquisition on February 15, 2019.
Why did the Court of Chancery find that Richard Stollmeyer breached his Revlon duties?
The court found that Stollmeyer favored Vista while pursuing liquidity and continued-employment interests. It also found that he gave Vista informational and timing advantages and did not provide the board with a complete account of his contacts and interests.
What information did the Mindbody proxy omit?
The proxy materials did not fully describe Stollmeyer’s early meetings and discussions with Vista, his response to Vista’s ownership model, and communications involving price and process timing. The courts found that three partial omissions and four complete omissions were material when considered together.
How much did the court award in damages?
The Court of Chancery awarded $1 per share in compensatory damages for Stollmeyer’s Revlon breach. The amount represented the difference between the $36.50 merger price and the $37.50 price the court found Vista would have paid in an unaffected process.
Why did the Delaware Supreme Court reverse Vista’s liability?
The evidence did not establish that Vista knowingly participated in Stollmeyer’s disclosure breach through active or substantial assistance. Vista’s knowledge of the underlying events, contractual proxy-review rights, and failure to request corrections were insufficient because Vista had no independent fiduciary duty to Mindbody stockholders.
What happened to the $27 million partial settlement and the damages award?
The Court of Chancery approved the $27 million settlement with Eric Liaw and Institutional Venture Partners-affiliated entities on June 8, 2022. After the appellate decision, the remaining net settlement proceeds were combined with the net proceeds from the separate damages judgment for distribution, and the administrator reported payments in February and October 2025.
Business mergers
Valuation
Damages Calculations
Proxy Advisory
Acquisition
Private equity funds
Shareholder Disputes
Corporate Finance
Technology
Patent, +4
Technology
Artificial Intelligence, +4
Technology
The Court of Chancery approved the $27 million settlement with Eric Liaw and Institutional Venture Partners-affiliated entities on June 8, 2022. After the appellate decision, the remaining net settlement proceeds were combined with the net proceeds from the separate damages judgment for distribution, and the administrator reported payments in February and October 2025.