Selling a Business: Why Your Emails Could Backfire

Authors: Laurie Propeck and Jeff Li

Many business owners have the habit of using their work email for all communications, including those related to the sale of their business. It is not uncommon for purchase offers to arrive in this inbox, then be forwarded to legal advisors, with exchanges continuing this way until closing.

However, once the transaction is completed, the servers associated with this address are generally transferred to the buyer—whether in an asset or share purchase—giving them access to the full history of communications. This may include sensitive exchanges between the seller and their lawyer.

When Your Emails Become Evidence

This scenario is not hypothetical: in the Ontario case Ellis Packaging Limited v. Ellis, emails between the sellers and their lawyer ended up in court and were used by the buyer. The sellers attempted to invoke solicitor-client privilege to block their use, but were unsuccessful.

Specifically, the exchanges involved the Vice President of Finance of the sold company and the sellers’ lawyer. The court concluded that this lawyer represented not only the sellers but also the company itself.

Result: after closing, the company’s solicitor-client privilege also belonged to the buyer, who had become the owner of the company, allowing them to introduce the emails as evidence.

The Great Hill Clause: A Legal Solution to Protect Your Confidential Communications

Good news: solutions exist! It is entirely possible to include a so-called Great Hill clause in the purchase agreement, which clarifies the rights and obligations related to privileged communications between sellers and their lawyer.

Explanation of the Great Hill Clause: “In practice, a Great Hill clause ensures that all communications between the sellers and their lawyer remain confidential, belong to the sellers, and cannot be used by the buyer after the transaction.”

Although this clause is perfectly legitimate, it is not yet standard in purchase agreements, which can sometimes create tension or friction during negotiations between the buyer and seller(s).

At KRB, we view the Great Hill clause as a contractual safety net, but nothing replaces simple measures, such as using a separate email address. Both approaches complement each other and strengthen seller protection. Simple and proactive strategies often prevent these situations from arising in the first place.

For Sellers: 3 Tips to Protect Your Communications During a Business Sale

1. Use a separate email address (such as your personal email) for the transaction.
2. Discuss with your lawyer the possibility of including a Great Hill clause.
3. Ensure your purchase agreement clearly reflects the parties’ intentions regarding confidentiality.

For Buyers

Buyers should understand that a Great Hill clause is not intended to hide relevant information but solely to protect solicitor-client communications. Remember that the seller’s lawyer acts as an advisor to their client and ensures that communications are candid and transparent. It is therefore normal that these exchanges are not accessible to the buyer.

That said, it remains essential for the buyer to conduct thorough due diligence to ensure they have all relevant information to make an informed decision.

At KRB, we also guide buyers to achieve a winning balance: protecting the seller’s confidential communications while ensuring complete and thorough due diligence. We remind them that such protection does not limit access to relevant information but secures the transaction for all parties.

Conclusion

In a transaction, the simplest protection is often the most effective. For business owners, it is usually more efficient to use their personal email or create a dedicated address for the sale or exit to handle all related communications.

This example clearly shows that a legal solution does not need to be complex: such a simple measure could have easily prevented the sellers’ situation.

At KRB, we anticipate issues before they arise, offering practical and tailored solutions to secure the transaction and protect our clients’ interests.