Shareholder litigation involving mergers and acquisitions continued its upward trend in 2013, with 94% of deals valued over $100 million during the year challenged by shareholders.

The figure is up from 93% of deals challenged in 2012, and a dramatic increase from 44% in 2007, according to a Cornerstone Research analysis. The study says 2013 marks the fourth consecutive year in which shareholders challenged over 90% of M&A deals valued over $100 million

For the study, Cornerstone Research tracked lawsuits—usually in the form of a class action—filed by shareholders of public companies where plaintiff attorneys “typically allege that the target's board of directors violated its fiduciary duties by conducting a flawed sales process that failed to maximize shareholder value.”

In total, 612 lawsuits were filed challenging deals valued over $100 million, with each deal drawing an average of five lawsuits against it. The $24.9 billion buyout of Dell, Inc., in which founder Michael Dell and private-equity house Silver Lake acquired the company to take it private, led all other deals with 26 lawsuits filed challenging the deal.

Deals valued over $1 billion had traditionally seen a larger percentage of challenges than deals valued between $100 million and $1 billion. But the gap has narrowed over the years and disappeared altogether in 2013. For example, in 2008, 81% of deals valued over $1 billion were challenged by shareholders, while 35% of deals valued between $100 million and $1 billion were challenged. In 2009, the difference shrunk to 94% of deals valued over $1 billion and 81% of deals valued between $100 million and $1 billion. Successive years show the gap shrinking even more. In 2013, the Cornerstone Research study shows 94% of deals valued both over $1 billion and between $100 million and $1 billion were challenged.

In 2013, litigation in 75% of the deals was resolved before the deal closed, down from 79% in 2012 and 78% in 2011. Of that 75% figure, 88% were settled, 9% were withdrawn by the plaintiffs and 3% were dismissed by the courts. Cornerstone Research says 23% of the actions are pending.

Adel Turki, a senior vice president of Cornerstone Research and head of the firm's finance practice, says in a statement, “As in prior years, litigation for the majority of 2013 M&A deals was resolved before the deal was closed. None of the lawsuits in our data went to trial, and all judgments, including summary judgments or judgments on the pleadings, were granted to the defendants.”

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