A legal precedence that dictates if the sale of the company is forthcoming, the main goal the company's board of directors should have is to conduct the proceedings in a manner that would yield the most benefit for the company's shareholders. Essentially, assuming that a number of situations are fulfilled (there are two or more buyers, all bids are cash-based acquisitions and that all parties have the requisite financing), the board of directors should always be picking the highest bid.




Taobiz explains Revlon Rule
The Revlon rule came from a court case in 1985 where directors from Revlon Inc. accepted a lower bid by white knight, Ronald Perelman, through implementing a series of takeover defenses to stave off a hostile takeover from Pantry Pride. It was found that Revlon's directors did not act in accordance with their fiduciary duty to their shareholders by accepting the lower bid, because they wished to avoid the consequences of certain earlier actions, which Pantry Pride would not have condoned.