The short answer
It depends on how the deal was structured, which state's law governs and what the merger agreement says. In a merger, the target's rights can pass to the surviving company, and courts in some states have treated that as including control of privileged communications about the sale itself. Because the default can favor the buyer, sellers' counsel commonly negotiate an express clause that reserves pre-closing deal communications to the sellers.
For M&A advisors the practical problem is physical. Emails between the seller's management and its deal lawyers often sit in the target's email system, and the buyer controls that system from the day of closing.
Where the answer comes from
Three things decide who controls pre-closing privileged communications, and counsel will look at all of them:
- Deal structure and governing law. A merger, a stock purchase and an asset purchase move rights differently. In a stock purchase the target entity and its relationships continue; in a merger, the state's merger law and the court decisions applying it govern what passes to the survivor; in an asset deal, it depends on what was transferred.
- The merger agreement. Many agreements include a privilege clause that keeps deal communications with the sellers, waives conflicts so sellers' counsel can act against the buyer after closing, and limits the buyer's use of those communications.
- What happened to the communications. Whether deal emails were removed or segregated before closing, and whether the buyer agreed not to access them, can matter alongside the clause.
Court decisions on this point are state-specific and have changed over time, which is why sellers' counsel ask for an express carve-out rather than rely on the default. Ask counsel how the governing state's decisions apply to your facts.
Lawyers on either side work under a separate layer of rules. Fee and conflict rules for lawyers come from each state's version of the ABA Model Rules of Professional Conduct, which serve as a template that states adopt and vary, so lawyers must check their own jurisdiction.
How it plays out in common situations
| Situation | What to check | Outcome to confirm with counsel |
|---|---|---|
| Merger, agreement silent on privilege | Governing law and how its courts treat pre-closing communications | Whether the buyer now controls the deal communications |
| Merger agreement with a seller privilege carve-out | Scope of the clause, who acts for the sellers, any buyer covenant not to use the material | Whether the carve-out covers emails still stored on the target's systems |
| Stock purchase | Whether the entity and its counsel relationships continue unchanged | Whether privilege simply stays with the target |
| Asset purchase | Which assets, records and rights were transferred | Whether privilege over the transferred business moved with it |
| Deal emails left in the target's Microsoft 365 or Google Workspace tenant | Whether they were removed, segregated or access-restricted before closing | Whether storage on the buyer's systems affects the sellers' position |
| Threads copied to bankers or other non-lawyer advisors | Who was on each thread and why | Whether privilege applies to those threads at all |
| Acquired company later considers licensing its email archive | Counsel-domain mail, deal folders, legal hold mailboxes, carve-out obligations | Which material must be excluded before any inventory |
Microsoft 365
Google WorkspaceThe last two rows are where M&A advisors are most often asked for help after closing, alongside integration work such as the first-quarter accounting cleanup and keeping the old domain and archives when rebranding an acquired company.
Why privileged material stays out of any data license
When an acquired company considers licensing its operating records through SourceX, privileged communications are out of scope. The company's counsel defines the exclusions, and de-identification and redaction requirements are agreed with the company before any work begins. In practice that means filtering out mail to and from outside counsel, in-house legal mailboxes, deal folders, data room archives and anything under a legal hold, then honoring any carve-out the merger agreement gives the sellers.
Privilege is one filter among several. Customer commitments are another: FTC staff stated in a January 2024 post that companies' promises not to use customer data for undisclosed purposes, such as training or updating models, are enforceable whether made in privacy policies, terms of service or promotional materials. The related question of whether an AI roll-up can use an acquired firm's client data applies the same thinking to client files.
Referral partners never see any of this material. A partner makes the introduction; the company and SourceX handle the inventory, exclusions, contract and delivery, and nothing is delivered without an executed agreement and the company's authorization.
Disclosure and consent good practice for advisors
- Never forward, export or summarize deal emails, data room files or anything an NDA covers when making an introduction.
- When you introduce a former client or an acquired company to SourceX, tell them you are a SourceX partner and may earn a referral reward if a deal closes and is paid.
- Leave it to the company's counsel to decide what is privileged and what the merger agreement reserves to the sellers.
- If you are a lawyer, check your own state's rules on fees and referrals before accepting any reward.
- Keep your introduction to basic fit: size, years of operation, systems in use and who the sponsor would be.
Questions to ask deal counsel
- Which law governs the merger, and how do its courts treat pre-closing privileged communications?
- Does our agreement reserve deal communications to the sellers, and does that reach copies left on the target's systems?
- Who acts for the sellers on privilege questions after closing?
- What must the buyer do, or avoid doing, with deal emails still in the tenant?
- If the company inventories records for a license, which mailboxes, domains and folders must be excluded?
This is general information, not legal, tax or financial advice. Confirm with your own counsel or professional body before acting.
Next step
For more on where deal advisors fit in the program, see referral opportunities for M&A advisors and the who qualifies baseline. Once privilege questions are settled, register as a partner to introduce an acquired company.