DExit: Reincorporation Data Seem to Support the Hype
Harvard Law School Forum on Corporate Governance, 2025
A pattern of Delaware companies reincorporating to another state – referred to as “DExit” – has received recent attention in the business press following the Delaware Court of Chancery’s invalidation of Elon Musk’s $56 billion Tesla compensation package in early 2024. To examine whether the DExit news coverage has been accompanied by meaningful changes in reincorporations, Analysis Group authors reviewed reincorporation data from periods prior to and following the Musk decision.
In an article published in the Harvard Law School Forum on Corporate Governance, Managing Principal Gaurav Jetley and Associate Nick Mulford examined Securities and Exchange Commission (SEC) filings for large public companies and reviewed the state of incorporation for firms that have gone public. The reincorporation data are consistent with the heightened interest around reincorporations away from Delaware: Following the Court of Chancery’s decision in the Musk case, Delaware experienced a net loss of 11 large public companies through reincorporation, a notable reversal from the two years prior, when it gained four firms. Most companies departing Delaware were entities defined as “controlled” under recent Delaware legislation. Although the incorporation data indicate that Delaware remains the leading home for initial public offerings (IPOs), its IPO share dipped in the first half of 2025, raising questions about Delaware’s status as the default state for incorporation in the face of growing competition from states such as Nevada and Texas.
The authors note the significance of Delaware’s passage of legislation in early 2025 that provides statutory clarity on transactions involving controlling shareholders and suggest “[t]he near-term evaluations taking place in boardrooms [regarding this legislation] will determine whether recent DExit trends are an anomaly in Delaware’s continued dominance.”
Figure 1. News Publications on Reincorporation and Interest in Delaware Incorporations (Q3 2020 – Q2 2025)
Notes:
[1] “News Articles” search identifies 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, the Financial Times, and Barron’s, among others.
[2] “Google Searches” uses Google Trends to identify searches for “Delaware incorporation” during the past five years, then aggregates the weekly data and reindexes to create an index for average quarterly searches. Available at https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=delaware%20incorporation&hl=en-US.
Sources: Dow Jones Factiva; Google Trends.
Figure 2. Delaware Reincorporations from 2022 to 2023 for Companies with Market Capitalization Greater than $250 Million
Notes:
[1] Excludes special purpose acquisition companies (SPACs) and business combinations not driven by reincorporation. Dates as of SEC filing.
[2] Compiled using SEC filing search (Schedule 14A, Schedule 14C, Form 8-K, Form S-4) for filings containing “plan of conversion,” “change its domestication,” “the reincorporation,” “redomestication,” “re-domestication,” or “domestication from.”
[3] Market capitalization calculated as of the Reincorporation Date.
Sources: SEC EDGAR, S&P Capital IQ.
Figure 3. Delaware Reincorporations from 2024 to 2025H1 for Companies with Market Capitalization Greater than $250 Million
Notes:
[1] Excludes SPACs and business combinations not driven by reincorporation. Dates as of SEC filing.
[2] Compiled using SEC filing search (Schedule 14A, Schedule 14C, Form 8-K, Form S-4) for filings containing “plan of conversion,” “change its domestication,” “the reincorporation,” “redomestication,” “re-domestication,” or “domestication from.”
[3] Market capitalization calculated as of the Reincorporation Date.
[4] Does not include pending reincorporations as of 2025H1. Pending reincorporations may be approved by shareholders but not yet formally completed with state filings.
[5] As of 2025H1, there were 3,228 US-headquartered companies with market capitalizations greater than $250 million publicly listed on the NYSE or Nasdaq.
Sources: SEC EDGAR, S&P Capital IQ.
Figure 4. Delaware’s Share of US IPO Incorporations for Companies with Market Capitalization Greater than $250 Million
Notes:
[1] Includes non-SPAC, US-incorporated companies that went public on the NYSE or Nasdaq with a market capitalization of greater than $250 million one week after IPO.
[2] “Other” states include Florida (2), California (1), Colorado (1), Michigan (1), Minnesota (1), New York (1), Texas (1), Utah (1), and Virginia (1).
Sources: S&P Capital IQ.
Authors
Jetley G, Mulford N