Does Delaware Still Reign Supreme for Company Formation?

March 10, 2026

Over the past few years, I’ve seen growing curiosity among founders, investors, and deal professionals about whether Delaware is still the “default” location of choice for incorporating companies, especially as Nevada and Texas market themselves as founder-friendly, tax-friendly, or red-tape-free jurisdictions.

Let’s get this out of the way: Delaware is still the gold standard for most venture- and private equity–backed companies. But the discussion is worth having, especially as more founders and institutional investors weigh entity formation choices in an increasingly remote, multistate, and cross-border business world.

Delaware: The Institutional Benchmark

Delaware’s dominance isn’t just the result of inertia. The state has a deeper, more predictable, and more sophisticated body of corporate law than any other state. The Delaware Court of Chancery, a business-only court system with no juries, was established in 1792 and is a key reason why institutional investors continue to push for Delaware entities.

It’s not just about protecting investors; Delaware offers greater clarity and certainty for boards, officers, and legal counsel navigating fiduciary duties, M&A processes, and financing structures. In private equity deals, I’d estimate 95% of definitive agreements still assume a Delaware framework.

For deal lawyers, founders, and business principals, speed and responsiveness are critical. A filing delay of even a few hours can have significant negative consequences. For example, it can derail a carefully modeled closing date, which in turn can result in additional interest incurred on debt; push a transaction out of a clean month-end close; upset the sequencing of a pre-closing restructuring, potentially resulting in a multiday closing delay; disrupt transitional planning; or complicate operational go-live dates. In the world of complex M&A and other business transactions, we can still count on Delaware to deliver when the minutes and hours count.

From a practical standpoint, I’ve represented clients on transactions involving mergers in Delaware, Nevada, and Texas within the past year. When speed and responsiveness were critical, Delaware consistently delivered within the demanding timelines of these high-stakes transactions. Nevada achieved same-day filing but several hours behind Delaware, while Texas trailed significantly—enough that I wouldn’t put it in the same category as Delaware or Nevada when it comes to filing efficiencies.

Nevada: Privacy and Protection, With a Catch

Nevada touts strong liability protections and enhanced privacy for officers and directors. That can be appealing, especially for controlling shareholders, smaller businesses, or founders wary of personal exposure. But outside of local or lifestyle-driven reasons to incorporate there (for example, you live in Nevada and never plan to raise institutional capital), Nevada is still a fringe player in high-stakes transactions.

The state’s corporate law is less tested. And in my experience, sophisticated buyers and investors often ask Nevada entities to reincorporate in Delaware before closing, which adds cost and complexity. Good for asset protection? Maybe. Good for a Series A or exit to a sponsor? Not ideal. And let’s not forget that

Delaware offers much of the same privacy protection as Nevada, although Nevada has somewhat stronger limitations on shareholder inspection rights.

Texas: A Rising Contender, But Not There Yet

Texas is having a moment. Amid the state’s booming tech and industrials scene, more founders are forming entities in Texas, often based on regional pride, the state’s pro-business policies, or convenience. And to be fair, Texas law has made strides, particularly for closely held LLCs and family businesses.

But for deals involving external capital, cross-state ownership, or complex equity structures, Delaware still wins on flexibility, case law, and market acceptance. And based on my recent deal experience, filing delays with the Texas Secretary of State remain a meaningful barrier compared with Delaware or even Nevada.

Why Some Companies Move Out of Delaware

Despite the continued benefits of incorporating in Delaware, a few companies have chosen to reincorporate elsewhere. Their motivations appear to fall into one or more of the following buckets:

Concerns around heightened and sometimes unpredictable independence standards for directors—particularly gray areas around required disclosure when directors are involved on both sides of a transaction.
A perception that other states offer more flexible fiduciary standards for controlling stockholders.
Frustration with the significant time and resources spent responding to stockholder books and records requests in part due to how broadly Delaware courts have defined what qualifies as “books and records.”

While these issues push some companies to consider Nevada or Texas, they remain the exception. And importantly, Delaware has already responded to these criticisms with new legislation aimed at clarifying director independence, refining fiduciary standards, and narrowing the scope of stockholder inspection rights.

My Takeaway

If you’re a founder aiming to scale, raise outside capital, or eventually sell your company, you’ll likely end up in Delaware sooner or later. Starting there can save time, fees, and negotiation headaches down the line.

Of course, many founders and businesses have unique circumstances that may make Texas or Nevada the right place to form. I’ve represented plenty of entities incorporated in both states, and there are ways to make those structures work.

About the Author Michael Vignone is a partner at Croke Fairchild Duarte & Beres. He focuses his practice primarily on mergers and acquisitions, private equity, and venture capital transactions.