Retaining The Attorney-Client Privilege In A Merger

In Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, Chancellor Strine of the Delaware Chancery Court recently reaffirmed that the target company in a Delaware merger is the sole holder of the attorney-client privilege to communications with its counsel and the privilege cannot be claimed by the seller (the target's shareholders). The Great Hill case involved a buyer who filed suit for fraudulent inducement by the seller following the consummation of the buyer's merger with a company owned by the seller because the buyer found troubling communications between the seller and counsel for the company about the merger on the company's computers. The seller argued that, as the pre-merger owner of the company, it owned the attorney-client privilege that protected communications between the company and counsel and that it also retained the attorney-client privilege after closing of the merger. Chancellor Strine disagreed with the seller. Upon the closing of