Appraisal Right

You own stock in Fred’s Fanny Shop, which is going to merge with Beth’s Blasphemous Bon Bons. You didn’t want this merger to happen (in fact, you gave it a no-go when a shareholder vote was taken). Further, you’re being told that in this transaction, your stock in Fred’s is being valued so as to be worth a dollar a share. You swear that the value should be higher.

In this instance, you’ll refer to your appraisal rights, which are your rights as a stockholder in a corporation that is merging with or being bought out by another corporation. That is, you have the right to bring in your own expert and have that banker give a fairness opinion as to the fairly appraised value of your assets in the transaction.

Minority shareholders can, by law, ask that a company that is not affiliated with Fanny’s or Fred’s determine the value of stock. This presumably much higher price, as opposed to the crappy price that you were originally approached with, will then be used in the merger, essentially defending the value of your investment in Fred's.

In other words, this is a legal method of protecting you from getting screwed.