Social Media Accounts in Business Sales

Social media accounts can represent significant value to a business. However, what if the accounts cannot be transferred as part of a sale of the business? Consider the following…

Popular business acquisition structures….

The two most popular methods of selling a privately held business are: an asset sale and an equity sale. In an asset sale, the buyer most commonly purchases most, but not all of the company’s assets. In an equity sale, the buyer most typically acquires all of the equity in the company from the equity holders (e.g., corporation stock from the shareholders or limited liability company interests from the members). In an equity sale, the company stays exactly the same—its assets and liabilities remain unchanged. The only thing that changes is the owners of the entity.

Social media accounts…

User accounts of social media platforms (e.g., Facebook, Twitter, LinkedIn, Instagram, YouTube, Pinterest, Google+, Reddit, Tumblr, Rumble, SnapChat, etc.) can represent significant value to a business. Lurking in the user terms of service agreements (which few, if any, users ever seem to read) may be limitations or outright prohibitions on the transfer of the accounts. Thus, while the transfer of both tangible business assets (e.g., inventory, equipment, etc.) and intangible business assets (e.g., goodwill, trade names, etc.) is normally routine, the acquisition of social media accounts may require additional steps or a creative workaround.

Conclusion…

The social media accounts of a business may be very important to an asset buyer. Acquiring such accounts in a business purchase may require some creative planning. Please feel free to contact me with regard to dealing with social media accounts in asset sales and equity sales.

PLEASE NOTE: This blog is merely for the general interest of the reader. It is not legal advice or opinion and it does not create an attorney-client relationship. Please call me at 973-921-0600 if you’d like to have a free initial telephone consultation or learn more about me or my practice. Thank you.