Inovalon Holdings, Inc.

KTMC brought claims by minority stockholders of Inovalon Holdings, Inc. (“Inovalon”) to challenge the take-private of Inovalon by a consortium of private equity investors led by Nordic Capital as well as Inovalon’s founder, CEO, and controlling stockholder Keith Dunleavy. Inovalon provides cloud-based platforms for healthcare providers. In 2021, Inovalon was approached by Nordic who offered to take the company private and offered an attractive rollover and post-closing compensation package for Dunleavy. The Board agreed to a price of $44/share for the take private but, at the eleventh hour, Nordic informed the Board that it could not finance the merger and dropped its bid to $40.50/share.  Despite acknowledging the price drop was unacceptable, not in shareholders’ best interests, and that there was no need to sell, the Board ultimately agreed to $41/share.  Plaintiffs alleged that the merger was unfair and deprived shareholders of Inovalon’s upward trending business at a time when there was no need to sell, and gave insiders preferential treatment. Further, Plaintiffs discovered that the banker that led the sale process, JP Morgan, had significant relationships with the consortium purchasers that were not disclosed to shareholders. Defendants moved to dismiss, which was granted by the Delaware Court of Chancery. However, Plaintiffs appealed and in May 2024 the Delaware Supreme Court reversed the dismissal based primarily on to the massive undisclosed conflicts of interest between JP Morgan and the private equity consortium.  The case is now proceeding into discovery and trial preparation.