In Smith v. Van Gorkom, 1 the Delaware Supreme Court held that the directors of Trans Union Corporation breached their fiduciary duty of care by approving a merger without adequate information on the fairness of the offered price of $55 per share.' Trans Union's directors, who relied solely on their chairman for the valuation of the transaction,' did not follow the common practice of asking an investment banker to render a fairness opinion. 4 The court suggested that, although fairness opinions were not required by law, the directors could have exercised an informed business judgment by obtaining such an opinion. 5 As one of the few cases imposing personal liability on the reputable directors of a major corporal. 488 A.2d 858 (Del. 1985). 2. Id. at 874. The existence of a substantial premium over market value, without more information, did not provide an adequate basis for approving the transaction. Id. at 869 n.9 (offered price represented premium of 62% over average of Trans Union's high and low prices during previous nine months, and premium of 48% over last closing price). 3. Id. at 876-77. At the time of the directors' decision, no formal analysis (either in-house or outside) of Trans Union's value in an acquisition had been prepared. The chief financial officer's brief oral statement to the directors regarding the feasibility of a leveraged buyout did not constitute an adequate valuation study or "report" on which the directors could rely as defined by DEL. CODE ANN. tit. 8, § 141(e) (1983). Van Gorkom, 488 A.2d at 875. 4. Directors ask investment bankers to render fairness opinions in a wide variety of corporate control transactions.

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