Two Competitors, One Deal Team, and a File Picked Up Mid-Stream

The situation

The call came in from Kenneth on a Wednesday morning, and the first thing he said was that his previous lawyer had withdrawn from the file two weeks earlier, midway through a deal that was supposed to close in six weeks. He did not have much time to explain the history before he had to describe what he actually needed: someone to pick up a competitor acquisition already in progress, understand what had been done so far, and get it back on track without losing the momentum the deal already had.

Kenneth had trained as a pharmacy technician before he and his business partner, Cherise, built a compounding and delivery pharmacy service that supplied clinics and long-term care homes across the Wallaceburg area. Over twelve years they had grown the business from a single storefront into a regional operation with its own delivery fleet, competing directly with a handful of other independent compounding pharmacies in the area, including one run by Camille, who had built her company's logistics side after years working as a long-haul truck driver and understood delivery routing better than most people in the industry. When Camille decided to sell rather than keep competing for the same shrinking pool of clinic contracts, Kenneth and Cherise saw an opportunity to acquire a rival's customer list and delivery routes rather than spend years building that reach themselves.

The deal, valued at somewhere in the range of ten to twelve million dollars, was already partway through due diligence when the previous lawyer withdrew, and Kenneth was not entirely sure why the file had been dropped or what state it was actually in. Some due diligence materials had already been exchanged between the two companies' teams, including pricing data and customer information that Kenneth was fairly sure should not have moved as freely as it had, given that his company and Camille's were direct competitors right up until the moment the deal closed. He did not yet have the vocabulary to explain why that worried him. He just knew it did.

He also mentioned, almost as an aside, that Cherise had been the one keeping track of what had already happened on the file, because Kenneth had been focused on operations while the deal moved forward, and that gap in who actually understood the file's history was part of what made the handover harder than it should have been.

The risk we had to size

Once we had the file, the first job was not to advise on price or timing. It was to figure out exactly what information had already crossed between Kenneth's company and Camille's during the due diligence process the previous lawyer had overseen. Kenneth's team and Camille's team were still active, operating competitors up until closing, competing for the same clinic and long-term care contracts in the same region every week. Sharing detailed pricing, margin and customer-level data between two companies that compete against each other in the ordinary course of business, before a deal is actually approved and closed, creates real exposure under the federal competition law that governs coordination between rivals, not because either side intended anything improper, but because the information itself, once shared, can look like the kind of coordination the law is designed to prevent, whether or not the deal ever closes.

We requested everything that had already been exchanged and found that the previous lawyer had allowed both companies' general managers, the people actually setting prices and bidding on contracts week to week, to review each other's customer lists and per-contract margins directly, with no restrictions on who saw what or how it could be used if the deal fell apart. If the acquisition failed to close for any reason, both companies would be left as ongoing competitors whose operational leadership had already seen each other's pricing strategy and customer relationships in detail. That is exactly the scenario regulators are most concerned about: two rivals using a deal process as cover to align their pricing or divide up customers, whether or not that was ever the intention.

The risk we had to size was not abstract. We needed to work out how much of the exchanged information could realistically be unwound or walled off before closing, how much exposure already existed from information already reviewed, and whether the deal could still close on the original timeline once proper information barriers were put in place. Kenneth's board wanted an answer within days, not weeks, because the deal's financing was contingent on closing inside the original window the previous lawyer had negotiated before leaving the file.

What we did

1. Froze further information exchange immediately. Before anything else, we instructed both sides' operational staff to stop sharing any further pricing, margin or customer-level data through the channels the previous lawyer had set up. We could not yet say how serious the existing exposure was, but every additional exchange while that question was open only added to it, so the first move was to stop the bleeding rather than analyze it in real time.
2. Reconstructed exactly what had already been shared. We interviewed Kenneth's general manager and requested a log from Camille's side of every document and conversation that had taken place during the earlier due diligence. Without that inventory we had no way to size the risk accurately or advise the board with any confidence, so this step produced the factual record everything else in the file was built on.
3. Set up a clean team to carry the deal forward. We restructured the remaining due diligence so that only a small group of people on each side, none of whom set pricing or managed customer relationships day to day, could review competitively sensitive information going forward, with everyone else restricted to financial, legal and operational information that carried no competitive risk.
4. Obtained written confirmation from both companies' operational staff. We had Kenneth's and Camille's general managers each confirm in writing what they had reviewed and agree not to act on it in setting future pricing or contract bids while the two companies remained separate competitors. That written record mattered because a regulator or a disappointed party later asking what happened would find a documented, contemporaneous answer rather than two sides relying on memory.
5. Advised on the deal's original timeline given the handover. We told Kenneth's board plainly that meeting the original six-week closing date the previous lawyer had committed to was not realistic once the clean team was in place and the reconstruction of prior exchanges was complete, and we negotiated a short extension with Camille's side rather than rushing the remaining review.
6. Rebuilt the information-sharing protocol for the rest of the deal. Going forward, we set clear rules for what could be shared, with whom, and at what stage of the deal, tied to milestones rather than left to whoever happened to be on a call that week. That structure existed because the original breakdown had come from informal, undocumented access, and the fix had to be a protocol both teams could actually follow for the remaining months of due diligence and negotiation.
7. Negotiated a reduced purchase price reflecting the delay and residual risk. Because the deal took longer to close than originally planned and because some exposure from the earlier information exchange could not be fully undone, we negotiated a modest reduction in the purchase price with Camille's side, reflecting both the added cost of the delay to Kenneth's company and the risk that could not be entirely eliminated.

The outcome

The deal closed roughly ten weeks after the original target date, about four weeks later than the previous lawyer had committed to before withdrawing from the file. Kenneth's company acquired Camille's customer list, delivery routes and remaining contracts for a price reduced modestly from the figure originally discussed, reflecting both the delay and the residual risk from information already exchanged before the clean team was put in place. Camille was not entirely satisfied with the reduced price, and Kenneth would have preferred not to have needed the extra weeks, but neither side wanted to abandon a deal that made sense for both of them over a problem that, once identified, was manageable.

The information already shared before the clean team went in could not be entirely un-shared. What we could do was document that it had been identified, contained and not acted on, and restructure everything that followed to remove any further exposure. That distinction mattered: a deal that closes with a documented, corrected process behind it is in a materially different position than one that simply hopes nobody asks the question later.

Cherise took over as the point of contact managing the deal's remaining steps, since she had the clearest picture of the file's history, and the handover from the previous lawyer became, in hindsight, less of a setback than it first appeared. It forced a level of scrutiny on the due diligence process that might not have happened otherwise. Kenneth's company closed with the customer base and delivery reach it had set out to acquire, at a price that reflected the deal's real complications rather than the clean number the original timeline had assumed.

Camille's general manager and Kenneth's general manager, the two people whose earlier direct access had created the exposure in the first place, both moved into new roles at the combined company after closing, with clearly defined boundaries around what pricing information either could now see or act on going forward. That arrangement gave the board comfort that the same gap could not open again inside the merged business, and it became one of the reference points Kenneth's board pointed to when a smaller acquisition came up the following year.

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