Getting Followers to Follow After a Sale

Transcription

1 Getting Fllwers t Fllw After a Sale 12 December 2014 Overview Scial media is a phenmenn that is gaining mmentum in ppularity by the day. Scial media prviders (SMPs) prvide services that allw users t interact with thers and share and create cntent thrugh nline cmmunities. As such scial media may present great marketing pprtunities fr business f all sizes t prmte and market their brand and business. HIGHLIGHTS & KEY POINTS If yu have a business utilising scial media yu may eventually wish t sell yur business and the assciated scial media accunts (SMAs). Scial media accunts assciated with a business may be realised r sld fr value. Scial media prviders (SMPs) may have terms f service which restrict the ability t transfer wnership f scial media accunts. T successfully transfer the scial media accunt fr value a purchaser shuld cnsider: the type f service prvided by the SMPs; the value f the assets; wnership; and varius transfer ptins. Similarly, if yu wish t buy a business which has assciated SMA yu wuld want t make sure that yu btain the benefits f the scial media presence. Hwever, realising r purchasing the value f a business scial media accunt may nt be as straight frward as cmpared t sme ther assets f a business such as internet dmain names r intellectual prperty including registered and unregistered trademarks. What fllws is an verview f items t cnsider when buying r selling a business tgether with the assciated SMAs. Services f SMPs The services prvided by the majr SMPs can be gruped generally int the fllwing categries: prmtinal; database; billing; client list; Level 7, 70 Castlereagh Street, SYDNEY NSW 2000 Telephne: (02) Facsimile: (02) Website: access t platfrm; cnnectin; When selling r buying a business it is imprtant t identify the services prvided by the SMPs as it will have implicatins n the methd f transferring the scial PL41086 Getting Fllwers t Fllw After a Sale Page 1

2 media accunt assciated with the business. Anther reasn t identify the type f service prvided by the SMP is that the terms f service varies frm SMP t SMP. Fr example, while SMPs that prvide billing services such as PayPal allw businesses t pen an accunt in the name f the business ther SMPs nly allw accunts t be pened by individuals in their persnal capacity. The terms f service f mst majr SMPs which are pened by individuals in their persnal capacity may nt be transferred withut the authrity f the SMPs. Sme, such as LinkedIn, expressly frbid yu as the accunt hlder t sell, trade, r transfer yur LinkedIn accunt t anther party. Other SMPs, such as Facebk, Twitter and YuTube expressly allw a transfer if express cnsent r permissin is btained frm the SMPs. Hwever, evidence and experience suggest that there is generally n frmalised prcedure t btain SMPs cnsent t a transfer, n requirement fr an SMP t act reasnably in respnse, and little, if any, prspect that it will respnd at all. This means that transferring wnership r at least the value f SMAs requires a re-examinatin f the cnventinal prcess f buying r selling a business asset. Value f the Assets SMA may frm a cre part f the business which yu may be lking t buy r sell r it may frm an ancillary part f the business. In either case, there will be intrinsic value in the SMA assciated with the business prvided the SMA accunts can be transferred. The value may lie in the fllwers f the Facebk pages which allw the business t prmte and market its prduct r service amng the fllwers, r the prfessinal cnnectins n LinkedIn accunts wh refer wrk t the business r the details f the clients stred n the scial media accunt under the SMP. Identifying the assets f the business will help t determine the value f the transactin. By ascertaining the identity f the assets yu will be in a better psitin t carry ut the prcess t transfer the wnership r the value f the SMA. Fr example, there is trend amng financial advisers t use scial media t sme extent, with LinkedIn and Facebk usage amng planners n the rise. Accrding t sme reprts, linking adviser planning sftware t scial media platfrms is part f the next generatin f financial advice. In this instance, as the purchaser yu shuld ensure that the data cntained n the scial media platfrm if nt the SMAs themselves shuld frm part f any purchase and nt just the adviser planning sftware r the persnnel f the business. Ownership The issue with the abve is that many SMA are created by individuals in their wn persnal capacity. Therefre, the terms f service is between the SMPs and the individual in their wn persnal capacity which means that the SMAs are nt transferrable r assignable t the purchaser withut the permissin f the SMPs. On the ther hand, if the individual wh hlds the scial media accunt is an emplyee f the business wh will remain emplyed by the purchaser f the business then it may be pssible fr the emplyee t maintain management f the scial media accunt n behalf f the business under the terms f emplyment between the emplyee and the purchaser f the business. In practical terms, this means the purchaser f the business may retain cntrl and therefre value f the scial media accunt withut ging thrugh the angst assciated with an actual transfer f the scial media accunt. PL41086 Getting Fllwers t Fllw After a Sale Page 2

3 Meanwhile there are SMAs that may be pened and maintained under a business entity. Fr example, PayPal allws individuals authrised by their business t pen and use the accunt. Befre creating such an accunt PayPal requires that yu have yur business infrmatin available befre yu start, including yur business type and details f key individuals assciated with the business. Therefre, by purchasing the business, it may be pssible that SMA pened under a business wuld nly require updates t that accunt such as details f key individuals assciated with the business withut the prblem f having t btain the prir permissin f the SMP. Pssible Transfer Optins Ascertaining the type f service prvided by the SMPs tgether with the value and wnership f the scial media accunt assciated with the business shuld help the ptential purchaser r seller t identify the mst practical and efficient methd t transfer the value f the scial media accunt assciated with the business which requires cnsideratin f alternative strategies. Furthermre if yu are the vendr yu shuld carry ut yur due diligence befre entering int negtiatins and ffering yur business fr sale with the SMAs. Yu shuld prepare yur business assets including the SMAs fr sale well befre ffering t the market knwing if the SMAs can be transferred r nt and the requirements t transfer. The fllwing strategies are pssible ptins t transfer the value f a scial media accunt with each carrying certain risks f its wn. Optin 1: Purchase the business entity that cntrls the SMAs Fr the purpse f gaining cntrl f the SMAs a purchase f the business entity rather than a purchase f the assets wned by the business entity may be utilised t avid many f the difficulties nted abve. Hwever, this will ften be an unattractive ptin where, fr example, the business entity is heavily geared, has a restrictive r cmplicated equity structure, r has assets that a purchaser has n interest in acquiring r wuld give rise t adverse tax cnsequences. In circumstances where purchase f the assets is required, ther methds f gaining cntrl f the SMAs assciated with the business shuld be cnsidered. Optin 2: Require the existing hlder f scial media accunt t carry ut pre cmpletin bligatins As part f the purchase, the purchaser culd require the vendr t carry ut certain pre cmpletin bligatins which may include requiring the vendr t btain the permissin and authrity f SMPs t transfer SMAs assciated with the business t the purchaser. T that end the purchaser culd require the existing accunt hlder t check with the SMP as t whether a transfer f scial media accunt is pssible. Once pre cmpletin has been carried ut and if the permissin f the SMPs have been btained then fr the purpse f the cmpleting transfer f the SMAs the existing accunt hlder will need t prvide the current passwrd t the purchaser and agree nt t access thse accunts in the future. The purchaser culd then change the passwrd t prevent the existing accunt hlder t access the SMAs in the future. PL41086 Getting Fllwers t Fllw After a Sale Page 3

4 Optin 3: Appint the existing hlder f scial media accunt t maintain the scial media accunt as an agent Like ptin 2, appinting the existing accunt hlder as the purchaser s agent t maintain the SMAs f the business is unlikely t be cnsidered a breach f the SMPs terms f service because it wuld nt invlve an unauthrised transfer, assignment f wnership r passwrd disclsure. But, unlike ptin 2, this ptin relies n the purchaser maintaining a psitive relatinship with the existing accunt hlder. If the relatinship deterirates, there will be a risk that the existing accunt hlder will cease t act as the agent and therefre putting at risk cntrl f the SMAs. Optin 4: Vendr agrees t deactivate its scial media accunt and agree nt t pen any new accunt under certain cnditins. The purchaser is t then establish new accunt with the same r similar names while placing the existing hlder under a restraint. This ptin has the benefit f nt requiring the cperatin f the existing scial media accunt hlder and wuld nt likely breach the SMPs terms f service as it wuld nt invlve an unauthrised transfer. Hwever, nt all SMPs immediately make the name f deactivated accunts available fr ther users fllwing deactivatin. The purchaser might have t suffer thrugh an unavidable time lag r, wrse, cyber-squatters might pick up the name befre the purchaser des. Mre imprtantly, it is nt generally pssible t transfer the fllwers, fans, subscribers and the like f the deactivated accunts t the new accunts. The slate will be wiped clean, thus destrying what made the SMAs f the business attractive in the first place. T minimise the lss f fllwers fllwing a change f wnership, a clause may be inserted in the asset purchase agreement requiring the vendr t make cntact with all existing fllwers fr the purpse f inviting all existing fllwers t fllw the new scial media accunt. PL41086 Getting Fllwers t Fllw After a Sale Page 4

5 Pavuk Legal Services Pavuk Legal can assist yu with a full range f legal services in respect t purchasing r selling a business and/r the assciated digital assets such as SMAs including review f the SMAs, structure asset sale r business sale agreements t include SMAs. In respect f a sale f business, Pavuk Legal can assist yu with drafting apprpriate sale dcumentatin, advice in respect t the sale t the apprpriate purchaser. Please cntact: Andrew Pavuk apavuk@pavuklegal.cm Phne: Or Andrew Dicksn adicksn@pavuklegal.cm Phne: Or Maryna Rganva Maryna.Rganva@pavuklegal.cm Phne: This article cntains cmments f a general nature nly and is prvided as an infrmatin service nly. The article als reflects the law as at the date it was written and may nt take int accunt any recent r subsequent develpments in the law. The article is nt intended t be relied upn, nr is it a substitute fr specific prfessinal advice. N respnsibility can be accepted by Pavuk Legal r the authr(s) fr any lss ccasined t any persn ding anything as a result f anything cntained in the article. In rder t btain apprpriate legal advice particular t yur circumstances, please cntact either Andrew Pavuk n , Andrew Dicksn n r Jseph H PL41086 Getting Fllwers t Fllw After a Sale Page 5