DExit: Reincorporation Data Seem to Support the Hype

Interest in reincorporation away from Delaware has increased

Following the Delaware Court of Chancery’s invalidation of Elon Musk’s $56 billion Tesla compensation package in January 2024, there has been an uptick in the business press on reincorporations away from Delaware (DExit). Figure 1 shows that there was more than a threefold increase in the number of news articles in the business press referencing reincorporations from the 2021–2023 period to the 2024–2025H1 period (32 versus 144 average annual articles). [2] Similarly, Google Trends data show an increase in searches for “Delaware incorporation,” with the searches peaking in January 2024, which coincided with the Chancery Court’s decision on Musk’s compensation matter. A few articles since the Tesla decision in January 2024 provocatively suggested that the decision caused Musk to “[lead] a revolt,” “ha[d] Delaware scrambling to preserve its lucrative status as the corporate home of the American business world,” [3] and required lawmakers to “overhaul corporate law” with the aim of “keeping the state attractive to both investors and company leaders.” [4]

Figure 1 also shows that, even though some of the increased attention to DExit – as represented by Google searches and articles published in the business press – has subsided from the levels seen during Q1 2024, the levels remain elevated compared with those observed from Q3 2020 through Q4 2023.

Data suggest an increase in reincorporations of public companies from Delaware since 2024

To examine whether the data supported media concern over an exodus of large public companies from Delaware, we reviewed US Securities and Exchange Commission (SEC) proxy statements and S-4 forms to identify the reincorporation plans of publicly listed companies in the US. [5] To confirm that the proposed reincorporations were approved and completed, we reviewed Form 8- Ks. We exclude companies with market capitalization of less than $250 million [6] from the output to focus on decisions by larger firms, which would signal broader business concerns about governance and shareholder litigation risk.

Figure 2 shows that during 2022 and 2023, five public companies with a market capitalization greater than $250 million reincorporated to Delaware. During that two-year period, one company reincorporated to Nevada from Delaware (FG Financial Group). Therefore, during 2022 and 2023, Delaware had a net gain of four large public firms due to reincorporation. This result of net reincorporations to Delaware is consistent with the academic literature, which found that the majority of reincorporations have been to Delaware. [7]

Figure 3 shows the same information for the period from 2024 through June 30, 2025. This captures the period following the Chancery Court’s decision to invalidate Mr. Musk’s pay package. During 2024 and 2025H1, five public companies with a market capitalization greater than $250 million reincorporated to Delaware, with the most recent reincorporation in that period completed on June 13, 2025 (Forward Air Corp.). During that 18-month period, 16 companies reincorporated from Delaware. Therefore, during 2024 and 2025H1, Delaware had a net loss of 11 large public firms due to reincorporation. Of the 16 companies that departed Delaware, 10 (63%) were defined as “controlled” under Senate Bill 21 (SB 21, discussed at the end of this article), meaning that the largest owner held at least 33% of the company’s voting power. [8]

Figure 4 shows the 10 largest companies that reincorporated during the period from 2022 to 2025H1. Of those 10, only one company (Polaris) reincorporated to Delaware, and it was one of just two reincorporations prior to 2024 to appear in the top 10. Prior to 2024, the largest company to reincorporate out of Delaware was FG Financial, which had a $1.27 billion market capitalization as of its effective reincorporation date.

In addition to the above companies that finalized their reincorporations through 2025H1, at least four additional companies have completed their reincorporations since that date [9] and at least one other company has requested a shareholder vote on its reincorporation proposal. [10] Furthermore, other companies (e.g., Walmart [11]) have been publicly reported to be considering a Delaware departure.

Reasons for reincorporation are similar across firms: more certainty, reduced legal exposure, and lower costs

In their proxy statements requesting a shareholder vote for reincorporation, firms state their rationale for the proposed change. As shown in Figure 5, the 10 largest companies that reincorporated during the period from 2022 to 2025H1 cited many of the same reasons for reincorporation, including:

• Reduced Legal Exposure: Companies frequently cited statutes in other states that minimize director liability, especially for insider transactions. (E.g., Dropbox noted that Nevada provides greater stability for officers.) Additionally, some exiting companies viewed Delaware’s legal environment as encouraging of “unmeritorious and costly” litigation against controlled companies (e.g., Trade Desk), as well as creating “unnecessary distraction and costs for businesses” (e.g., Madison Square Garden Sports Corporation). [12]
• Governance Certainty: Many companies suggested that the more rule-based systems in states such as Nevada and Texas could provide more clarity and predictability for management. (E.g., Fidelity National Financial noted that Nevada’s “statute-based approach” would provide “greater certainty for corporate decision-making.”) [13] Companies found the limits placed on judicial interpretation in those states to be favorable and more predictable relative to jurisdictions that rely on an evolving common law interpretation.
• Cost Savings: Firms also highlighted the potential for direct financial benefits as a result of reincorporating out of Delaware. (E.g., TripAdvisor stated that it would receive “substantial savings” as it “paid approximately $250,725 in Delaware” annually compared to Nevada’s “annual business license fee of $500.”) [14]

Other identified reasons include:

• Proximity to Business Activities: A few companies explained their relocations by emphasizing the location of their existing operations and other ties to their new state (e.g., Tesla headquarters in Texas).
• Attracting and Retaining Talented Directors: A few companies also suggested that reincorporating into a new state would attract a stronger pool of director candidates by protecting themfrom excessive litigation (E.g., the real estate investment trust Simon Property Group communicated that reincorporation in Indiana would provide directors with “a clearer standard of conduct than Delaware law”). [15]

Delaware has remained the primary home of IPOs

Historically, Delaware has been the corporate home to more than 80% of IPOs on the NYSE or Nasdaq. [16] However, Andreessen Horowitz’s recent decision to leave Delaware and its recommendation that other companies do the same [17] have raised the concern that younger companies may also have started to consider alternatives to Delaware. To ascertain whether there has been a shift away from Delaware among private firms, we review the state of incorporation of firms that have gone public.

Specifically, we examine the state of incorporation of firms that went public via an IPO between January 2022 and June 2025. As with our analysis of exiting public companies, we limit our sample to IPOs with a market capitalization greater than $250 million and also exclude SPACs. [18] Figure 6 shows that Delaware accounted for 80–90% of IPOs during the period from 2022 to 2025H1. [19] The IPO data also show that Delaware firmly remains the leading state of incorporations of firms going public. However, Delaware’s market share during the first half of 2025 has declined. At this stage, it is too early to draw any firm conclusions from these data – firms generally make their decisions regarding state of incorporation years in advance – but the observed dip in IPO market share is consistent with the sentiment in the business press regarding a decline in the attractiveness of Delaware as the place to be incorporated.

Delaware’s passage of Senate Bill 21

On March 25, 2025, Delaware passed SB 21, which clarified rules for transactions involving interested directors, officers, and controlling shareholders. [20] While the passage of SB 21 enhanced Delaware’s appeal by providing statutory clarity on insider transactions and director independence, the bill’s broader impact remains uncertain. [21] There is anecdotal evidence of firms pausing on decisions to move from Delaware since its passage. For example, Mercado Libre (a large Latin American e-commerce corporation) has withdrawn its shareholder-approved reincorporation from Delaware to Texas since the bill’s passage. [22]

In summary, the increased attention in the business press, and perhaps even some of the hyperbole, seems to have been driven by the reincorporation of public firms away from Delaware. So far, the data suggest that the largest companies that are reincorporating from Delaware are controlled companies. When one focuses on IPOs, the share of firms choosing to go public as Delaware-incorporated firms remains very high, but Delaware’s share has declined a bit during the first half of 2025. Delaware has responded with the adoption of SB 21, which is aimed at providing clarity for controlled companies. Delaware’s longstanding position as the default choice for incorporation is facing increased competition from states such as Nevada and Texas. The near-term evaluations taking place in boardrooms will determine whether recent DExit trends are an anomaly in Delaware’s continued dominance.

The authors thank Amy L. Simmerman of Wilson Sonsini Goodrich & Rosati for her comments and Anirudh Chakravarthy and Soham Maiti of Analysis Group, Inc. for their research contributions.

1The authors thank Amy L. Simmerman of Wilson Sonsini Goodrich & Rosati for her comments and Anirudh Chakravarthy and Soham Maiti of Analysis Group for their research contributions.(go back)

2Identifies finance-related news articles containing “reincorporation” that were published in “Major News and Business Sources” as defined by Dow Jones Factiva. Major News and Business Sources include Reuters, The Wall Street Journal, Financial Times, and Barron’s, among others.(go back)

3“Delaware’s Grip on Corporations seemed solid. Elon Musk led a revolt,” Will Oremus, The Washington Post, March 4, 2025, available at https://www.washingtonpost.com/technology/2025/03/04/delaware-corporate-law-elon-musk/.(go back)

4“After Elon Musk’s Delaware exit, state lawmakers weigh bill to overhaul corporate law,” Lora Kolodny, NBC Chicago, March 15, 2025, available at https://www.nbcchicago.com/news/business/money-report/after-elon-musks-delaware-exit-state-lawmakers-weigh-bill-to-overhaul-corporate-law/3698537/.(go back)

5Compiled using SEC Electronic Data Gathering, Analysis, and Retrieval (EDGAR) for S-4 and proxy statements from 2022 to H12025, using at least one of the following terms: “plan of conversion,” “change its domestication,” “the reincorporation,” “redomestication,” “re-domestication,” or “domestication from.” We then exclude SPACs, duplicates, and redomestications related to mergers. We used annual reports (Form 10-K), current reports (Form 8-K), and Report of Foreign Private Issuer (Form 6-K) to confirm the effective date of companies that completed reincorporation.(go back)

6A market capitalization of $250 million is a common upper bound on microcap companies. See “Microcap Stock: A Guide for Investors,” SEC Investor Publications, September 17, 2013, available at https://www.sec.gov/about/reports-publications/investorpubsmicrocapstock. See also, “How Well Do You Know Market Cap?” Charles Schwab, November 20, 2023, available at https://www.schwab.com/learn/story/how-well-do-you-know-market-cap.(go back)

7“Regulatory Competition and the Market for Corporate Law,” Ofer Eldar and Lorenzo Magnolfi, American Economic Journal: Microeconomics (2020), available at https://www.jstor.org/stable/26921740. See also, “An Empirical Analysis of the Reincorporation Decision,” Randall A. Heron and Wilbur G Lewellen, The Journal of Financial and Quantitative Analysis, (1998), available at https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-analysis/article/abs/an-empirical-analysis-of-the-reincorporation-decision/EF3FEC8B58E90DFE1BEFFB48AE219C90; “Is Delaware Still a Haven for Incorporation?,” Demetrios G. Kaouris, Delaware Journal of Corporate Law (1995).(go back)

8Delaware Senate Bill 21 defines control as holding more than one third of the voting power of the corporation’s outstanding stock. See Senate Substitute 1 for Senate Bill 21, Delaware General Assembly, available at https://legis.delaware.gov/BillDetail/141930.(go back)

9Affirm Holdings, Inc., Form 8-K, June 25, 2025 (from Delaware to Nevada; effective July 1, 2025); Tempus AI, Inc., Form S-3, August 8, 2025 (from Delaware to Nevada; effective August 7, 2025); United States Antimony Corp., Form 8-K, August 26, 2025 (from Montana to Texas; effective August 26, 2025); Dillards, Inc., Form 8-K, August 19, 2025 (from Delaware to Texas; effective August 31, 2025).(go back)

10fuboTV Inc., Schedule 14A, August 7, 2025 (from Florida to Delaware; vote to be held on an undetermined date).(go back)

11“MAGA offers corporations cover to flee Delaware,” Liz Hoffman, Semafor, March 5, 2025, available at https://www.semafor.com/article/03/05/2025/maga-offers-corporations-cover-to-flee-delaware.(go back)

12See Dropbox, Inc., Schedule 14C filed February 10, 2025, at p. 5 (“After considering various alternatives, the evaluation committee concluded that Nevada’s statute-focused approach would likely foster more predictability than Delaware’s less predictable common law approach…”). See also, Trade Desk, Inc., Schedule 14A filed October 3, 2024, at p. 14 (“The absence of statutory bright-line standards in Delaware for transactions that may involve a controlling stockholder has encouraged law firms to test new theories of liability and broaden the definition of who is in control…”; “Indeed, over the last several years, our management spent countless hours and the company incurred substantial costs in connection with Delaware-related litigation…”). See also, Madison Square Garden Sports Corp., Schedule 14A filed April 23, 2025, at p. 15 (“The increasing frequency of claims and litigation in Delaware brought against corporations and their directors and officers creates unnecessary distraction and cost for businesses”).(go back)

13See Fidelity National Financial, Inc., Schedule 14A filed April 26, 2024, at p. 34 (“Nevada courts follow a more statute-based approach to director and officer duties that is less dependent on the vagaries of judicial interpretation in the Delaware courts…The Board believes that Nevada’s statute-based approach provides greater certainty for corporate decision making, which, in turn will benefit our stockholders”).(go back)

14See TripAdvisor, Inc., Schedule 14A filed April 23, 2023, at p. 29 (“The Redomestication will eliminate our obligation to pay the annual Delaware franchise tax, which we expect will result in substantial savings to us over the long term. For Fiscal 2022, we paid approximately $250,725 in Delaware franchise taxes…If we redomesticate in Nevada, our current annual fees will consist of an annual business license fee of $500.00 and the fee for filing the Company’s annual list of directors and officers based on the number of authorized shares and their par value, currently equal to $1,225”).(go back)

15See Simon Property Group, Inc., Schedule 14A filed April 1, 2025, at p. 89 (“We believe that Indiana law affords directors a clearer standard of conduct than Delaware law, thus enhancing our ability to attract and retain highly-qualified individuals to serve as directors…Reduced potential judicial ambiguity may be taken in account in operational and oversight matters and offers our Board clearer guidelines for actions that can benefit our shareholders in the long-term”).(go back)

16Annual Reports from the Delaware Division of Corporations, available at https://corp.delaware.gov/archived-annual-reports/.(go back)

17“We’re Leaving Delaware, And We Think You Should Consider Leaving Too,” Andreessen Horowitz, July 9, 2025, available at https://a16z.com/were-leaving-delaware-and-we-think-you-should-consider-leaving-too/.(go back)

18Special Purpose Acquisition Corporations.(go back)

19Annual Reports from the Delaware Division of Corporations, available at https://corp.delaware.gov/archived-annual-reports/.(go back)

20“Delaware Changes its Corporate Law: What Litigators and Clients Need to Know About Senate Bill 21,” Mayer | Brown, April 3, 2025, available at https://www.mayerbrown.com/en/insights/publications/2025/04/delaware-changes-its-corporate-law-what-you-should-know-about-senate-bill-21.(go back)

21Kolodny, op.cit.(go back)

22See MercadoLibre, Inc., Schedule 14A filed June 9, 2025, Supplement No. 2 to the Proxy Statement Dated April 28, 2025, at p. 1 (“The Company has withdrawn Proposal Four – Vote to Approve Redomestication of MercadoLibre, Inc. From Delaware to Texas by Conversion (“Proposal Four”) from shareholder consideration”).(go back)