DExit: Reincorporation Data Seem to Support the Hype

Summary

Analysis Group’s review shows a clear uptick in reincorporation activity away from Delaware after the Delaware Court of Chancery’s January 2024 decision on Elon Musk’s Tesla pay package. Media attention and Google searches spiked in early 2024 and have remained above pre-2024 levels. For large public companies (market cap > $250m), data for 2024–2025H1 show a net loss of 11 firms leaving Delaware, with many departures coming from “controlled” companies. Firms cite reduced legal exposure, greater governance certainty and cost savings as common reasons. Delaware responded with Senate Bill 21 in March 2025, aiming to clarify rules for transactions involving interested directors and controlling shareholders. Despite departures, Delaware still accounts for 80–90% of IPO incorporations through mid-2025, though its share dipped in early 2025.

Key Points

Media and Google Trends: references to reincorporation rose more than threefold from 2021–2023 to 2024–2025H1, peaking in January 2024.
Net movements: 2022–2023 saw a small net gain to Delaware; 2024–2025H1 shows a net loss of 11 large public firms from Delaware.
Controlled companies: about 63% of departing firms in 2024–2025H1 were “controlled” (largest owner >33% voting power).
Common rationales: reduced legal exposure, statutory governance certainty in other states (e.g. Nevada, Texas), and potential cost savings (e.g. franchise tax differences).
IPOs: Delaware remains the dominant incorporation choice for IPOs (80–90%), though its market share dipped in H1 2025.
Delaware response: SB 21 (March 25, 2025) clarifies interested-party transaction rules; some firms reportedly paused moves after its passage.
Geographic competition: states such as Nevada, Texas and others are actively positioned as alternatives to Delaware.

Content summary

The authors scanned SEC filings (S-4s, proxy statements and Form 8-Ks) from 2022 through June 2025 to identify reincorporations and confirm completions. They limited the sample to publicly listed companies with market capitalisations above $250m to focus on material corporate decisions. The analysis finds that while Delaware remained the destination for some reincorporations in 2022–2023, the pattern flipped after 2024: five firms moved to Delaware in 2024–2025H1 while 16 moved away. The largest migrating firms were typically controlled companies that explicitly cited legal and governance reasons for leaving. The piece also examines IPO incorporations through mid-2025 and notes that, although Delaware still dominates, there is an observable dip in its share in early 2025. Delaware’s SB 21 was enacted to shore up statutory clarity on insider and controlling-party transactions, and there are early signs it may slow some departures.

Context and relevance

This analysis matters if you work in corporate governance, litigation, in-house legal, investor relations or sit on a board. It provides data-driven evidence that recent media hype reflects real movement among larger firms — particularly controlled companies — and signals that Delaware’s monopoly on incorporations faces growing competition. The adoption of SB 21 shows Delaware is responding, but near-term boardroom decisions will determine whether the trend persists.

Why should I read this?

Short version: if your company, clients or portfolio companies care about litigation risk, director liability or incorporation costs — read this. It saves you time by pulling SEC filings and cutting straight to the trends: departures post-2024 are real, driven by legal and cost incentives, and Delaware isn’t taking the challenge lightly (hello SB 21). Worth a skim if you don’t deal with incorporations daily; essential if you do.