Managing Mergers and Acquisitions Risks: Examining Class Action Investigations and the Importance of Shareholder Voting

The second quarter of 2025 has proven to be a critical time for mergers and acquisitions (M&A), with a number of notable transactions currently facing legal challenges. Regulatory bodies and class action law firms are increasing their scrutiny of deal fairness, putting shareholders in a position where they must make critical decisions before voting deadlines to ensure they have a say in the outcome. This article will delve into four pending mergers—Servotronics (SVT), Southern States Bancshares (SSBK), LENSAR (LNSR), and iCAD (ICAD)—to demonstrate how legal challenges and voting timelines play a significant role in shaping investment opportunities and risks.

Class action lawsuits have become a powerful tool for shareholders to challenge undervalued offers or unclear disclosures in M&A deals. By applying pressure on companies to amend terms or resolve disputes, these lawsuits can compel acquirers to enhance bid terms or clarify risks. Law firms such as Monteverde & Associates are closely monitoring deals where valuation discrepancies or execution risks exist. In such cases, litigation can either prevent a deal from going through or result in increased shareholder value.

However, the timing of actions is crucial. Failure to meet voting deadlines means losing the opportunity to vote or participate in class actions, leaving shareholders in a vulnerable position without recourse. Below, we examine four deals where this time-sensitive dynamic is particularly crucial.

Servotronics (SVT) – Cash Offer vs. Growth Potential:

TransDigm’s $38.50 cash bid for SVT, a manufacturer of precision components.
Deadline: Tender offer expires on June 30, 2025.
Risk: While the cash offer simplifies execution risk, it may not fully capture SVT’s growth potential in aerospace and defense parts.
Class Action Angle: Monteverde & Associates is evaluating the bid’s alignment with SVT’s intrinsic value, potentially leading to a demand for a renegotiated price if the offer falls short based on discounted cash flow models.

Southern States Bancshares (SSBK) – Banking Sector Volatility:

Proposed 0.80-share exchange with FB Financial (FBK), a regional bank.
Deadline: Shareholder vote due by June 26, 2025.
Risk: FB Financial’s stock performance has been lackluster amidst turbulence in the regional banking sector.
Class Action Angle: Examination of the fairness of the exchange ratio, particularly in comparison to FBK’s lower price-to-book (P/B) ratio compared to SSBK.
Investment Strategy: Voting against the deal is advised if FBK’s valuation metrics do not align favorably with SSBK’s standalone value, unless synergies outweigh regulatory risks.

LENSAR (LNSR) – Contingent Value Rights (CVR) and Execution Risk:

Offer of $14 cash per share plus a CVR up to $2.75, contingent on post-merger milestones with Alcon.
Deadline: Vote by July 2, 2025, is required.
Risk: The value of the CVR is dependent on Alcon achieving revenue targets associated with LENSAR’s cataract surgery technology.
Class Action Angle: Potential litigation may question the achievability of milestones or the transparency of disclosures surrounding the CVR structure.

iCAD (ICAD) – AI Valuation Disputes:

0.0677-share exchange with RadNet (RDN), a healthcare IT company.
Deadline: Vote by July 14, 2025.
Risk: Skepticism surrounding the valuation of iCAD’s AI-driven diagnostics platform and challenges faced by RadNet in the healthcare IT sector.
Class Action Angle: Scrutiny over whether the offer accurately values iCAD’s AI assets, potentially leading to litigation for a higher price or clearer disclosure of synergies.

In conclusion, the second quarter of 2025 is a critical period for M&A transactions where shareholders in the highlighted deals must make informed decisions promptly to maximize value or mitigate risks. Legal scrutiny and voting deadlines are not to be underestimated—they are crucial strategic elements. For investors, the key is to analyze the numbers, adhere to deadlines, and allow litigation pressure to inform their decisions. Procrastination could result in missed opportunities and potential losses.