Entire fairness
A Delaware doctrine requiring controlling-party transactions to be entirely fair in process and price.
Definition
Entire fairness is a Delaware standard of review for controlling-party transactions. Requires both fair dealing (process) and fair price. Higher scrutiny than business judgment rule. Established in Weinberger v. UOP (1983).
Context
Most often applied to corporate squeeze-outs but extends by analogy to LLC controller transactions.
Example
A controlling member of a multi-member Delaware LLC engages in a self-dealing transaction. Entire fairness review applies (if Operating Agreement does not modify) and both process and price must be fair.
Common pitfalls
- MFW framework (special committee plus majority-of-minority vote) can shift to business judgment rule.
- Operating Agreement can modify the standard.