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“Great Hill clauses” in Cross-Border M&A: Canada Follows Delaware (Again), But How Far?

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Capital Markets and Mergers & Acquisitions Bulletin

Under Delaware law, the seller in an M&A transaction can include a “Great Hill clause”, i.e., one designed to preserve the seller’s control over the target’s privileged pre-closing attorney-client communications.

In particular, the goal is to prevent the buyer from having access to such target privileged communications in connection with any potential post-closing claim by the buyer against the seller.

But are “Great Hill clauses” – named after a 2013 decision of the Delaware Court of Chancery – effective in M&A governed by Canadian law? 

Early indications suggest they are, including, most recently, a June 2023 Ontario decision.

Indeed, Canada’s largest province is now the country’s second jurisdiction to endorse “Great Hill clauses” after Alberta did so ten years ago.

Writing in the American Bar Association M&A Committee’s Deal Points Newsletter (PDF, 3.1MB), we explore “Great Hill clauses”, their component subclauses, and their recent judicial treatment (and remaining open questions) for the benefit of M&A lawyers on both sides of the border.

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