In DExit Drivers, Professor Stephen Bainbridge offers a careful assessment of Delaware’s corporate-law dominance and concludes that recent departures pose little serious threat to the First State. We agree with much of his analysis but write to refine and update it considering recent developments. Since the article went to print, several of the differentiators Bainbridge identified have shown new signs of erosion: Andreessen Horowitz has publicly left Delaware and urged others to follow; Delaware’s share of IPOs appears to have fallen from a historical mean near 87% to 61.8% in 2025; Texas has created a dedicated business court; and Nevada has launched dual-track reforms aimed at facilitating efficient adjudication of business cases.
Our principal contribution is expanding on the impact of Delaware’s franchise tax, methods to mitigate it and implications for capital formation. The recurring annual nature of Delaware’s franchise tax warrants additional attention. Because corporations are the-oretically perpetual and the tax recurs every year, we believe it helps to think about it as something akin to a perpetuity. Framed this way, Delaware’s franchise tax may be a ma-terial recurring cost that can justify the expense and disruption of reincorporation for a sizeable group of public companies. To explore the issue, we consider two mitigation strategies—authorized-share reductions and outright DExit—and analyze how each interacts with capital-raising flexibility and stockholder voting dynamics and rules. We close by showing that corporations operating in Texas face a distinct calculus because Texas’s margin-based franchise tax cannot be avoided through reincorporation, Texas firms must weigh whether Delaware’s governance infrastructure offers some outstanding marginal benefit over what Texas offers to justify a domicile tax stacked atop an unavoidable activity-based one.