Recent Delaware Decsion Holds That in Absence of Contractual Provision, Buyer in M&A Deal Holds Privilege

In Great Hill Equity Partners v. SIG Equity Growth Fund, the Delaware Chancery Court was faced with the question of who owns the attorney-client privilege where one law firm represents both buyer and seller in a corporate merger.  In that case, after the acquisition, the buyer of the corporate entity brought a fraud claim against the seller.  In support of that claim, buyer sought to use communications it found on a computer between seller and its counsel in the sale.  The merger agreement did not specify who owned the computer, the communications contained on it, or the attorney-client privilege attached to such communications.  Delaware's merger statute states that all rights and privileges of the acquired company devolve to the surviving company (unless of course otherwise specified).  This case makes clear the need for sellers to retain by contract the privilege with respect to pre-merger communications.