If you are Men’s Wearhouse, Inc, the answer is a big fat NO!  Earlier this week, rival company Jos. A. Bank Clothiers, Inc. offered Men’s Wearhouse $2.3 billion to buy them out.  Men’s Wearhouse quickly responded with a resounding rejection.  Check out this article from Reuters.com entitled “Jos. A. Bank offers to buy Men’s Wearhouse, gets brush-off”

Why would Men’s Wearhouse turn this offer down?  It valued their shares at a 36% premium based upon Tuesday’s closing price.  However, the officers and directors of Men’s Wearhouse believed that this offer undervalued the company.  In Virginia (and all around the Country), directors and officers of a corporation are fiduciaries, owing the Duties of Care and Loyalty.  This requires that they asses all purchase offers in light of what is best for the company and its shareholders.  In this situation, they assessed that selling the company would not be in the best interest of the company and its shareholders.  Good for them!  If the officers and directors of a corporation sell the corporation for less than market value they could set off vicious lawsuits from angry shareholders.  As fiduciaries, they must act in good faith and with reasonable belief that the conduct is in the best interest of the corporation.

This is a good lesson to learn for all types of businesses.  If you are a director or officer, you must remember that you are also acting in a fiduciary capacity.  To protect yourself, get good financial and legal advice before making fundamental corporate changes (such as buying or selling a company).