Typically, constituency statutes do not require any nexus between nonshareholder consideration and a rationally related benefit for shareholders. In addition, under constituency statutes, there is no magical time when a board must stop thinking about nonshareholders and think only of shareholders. Under constituency statutes, directors may consider nonshareholders at every step of the process. These are very real concerns for high-growth and emerging companies who engage in strategic mergers to replace retiring officers, enter new capital markets and combine strengths to maintain competitiveness. Generating quick profits is often incompatible with their corporate mission.
Strategic mergers are unlike hostile takeovers in another important way.
Which company will be the surviving entity may be a matter of technology ownership or geographical location rather than strong cash flow or a healthy balance sheet. Poor initial decision making may lead a corporation down the primrose path. Revlon Duties require that once the decision to transfer control of the company has been made, a board must act solely in the shareholders' best interest by seeking to maximize their wealth. The board may not observe the interests of nonshareholders if such consideration will adversely affect shareholders' wallets. Corporations may avoid Revlon Duties by structuring transactions in ways that do not constitute a change in controlling ownership of the post-merger entity.