Great Hill Case Update: Five Years Later Addressing Sell-side Privilege in Merger Agreements

Five years after the Great Hill decision, there is now general consensus that attorney-client privilege related to pre-closing communications that occurred between the seller and its attorneys in connection with a merger transaction (“Deal Communications”) should be addressed in the merger agreement, likely in favor of the former securityholders of the target company (the “Shareholder Group”). However, there is still confusion and inconsistency on how best to do this. In the Great Hill case, the Delaware court determined that a buyer in a merger might be able to access the Deal Communications unless the parties included specific language in the agreement to prevent this.[1] As of two years ago, only 33% of merger agreements addressed sell-side privilege.

We examined over 140 merger agreements with private company targets from 2018 to get a current representation of what constitutes standard market practice.

Topics covered in the white paper include:

  • Changing Trends from then (2016) to now (2018)
  • Provisions Addressing Sell-side Privilege
  • Anatomy of the Sell-side Privilege Provision
  • Preliminary Language: Defining Privilege and Deal Communications and Identifying the Parties
  • Who Owns the Sell-side Privilege?
  • Who Controls the Sell-side Privilege?
  • When Is the Buyer Permitted to Assert or Waive the Sell-side Privilege or Use the Deal Communications (When Sell-side Privilege is Addressed, Generally)?
  • Should a Savings Clause be Included?
  • Other Sell-side Privilege Provisions
  • Is there a Fool-proof Way of Addressing Sell-side Privilege?

[1] Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, Civil Action No. 7906-CS (Del. Ch. Nov. 15, 2013).

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