B. Even if the privilege can be transferred, how do sellers avoid an immediate renunciation? For most mergers, buyers and sellers are represented by a lawyer. The shareholders of the sales company often consider that communication with the law firm, which was ”on the table on its side” at the negotiating stage of the transaction, remains confidential and is not available to the buyer, since it was the opposite party during the negotiation phase. However, this analysis does not take into account the actual nature of the relationship between the lawyer and the client. In most transactions, the firm`s client is the sales company, not its shareholders. With the closure, the target company usually becomes a 100% subsidiary of the buyer. A question was therefore asked as to whether the legal privilege and solicitor-client relationship rights are paid to the purchaser with respect to pre-concluded communications. The DLO Enterprises, Inc. court decision highlights some of the most important differences between mine mergers and sales. As the court pointed out, wealth transactions are not subject to the law, but are subject to the contract and necessarily involve the choice of assets and liabilities by a buyer to acquire or leave the target business. In addition, the target entity survives financial statements as part of an asset agreement, while the target entity merges in the event of a merger with or in another entity. As a result, the lien remains in a sale of assets to the sellers (including the target unit), unless the prerogative waiver is included as an asset acquired under the sale agreement. Thus, 23 years after its decision in New York, Tekni-Plex remains a good law.
Transaction lawyers should be aware of the new York lawyer`s client doctrine, as applied in the context of the merger. As Askari shows, the New York rule could continue to apply even if the parties chose to comply with Delaware law. In rejecting the buyers` application, the court found that the sellers retained solicitor-client privilege over prior communication deal with their former sales advisor. In this regard, the Tribunal issued its previous decisions in the context of the merger in Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP and Shareholder Representative Services LLC v.