Reincorporations Away from Delaware Examined by Analysis Group
October 23, 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.”