Asset vs stock deals: who gets the data when a distributor or 3PL is sold

Who gets the data in each deal structure?#

The data follows the entity in a stock deal and follows the purchase agreement in an asset deal. When a buyer acquires the shares or membership interests of a distributor or 3PL, the company that created and holds the records keeps existing, so its WMS history, ERP records and contracts stay put, together with its obligations.

When a buyer acquires assets instead, the seller entity remains with its former owners and transfers a defined list of assets. Records move only if the asset purchase agreement includes them, usually through definitions of books and records, customer lists or intellectual property. Anything not listed stays behind.

Mergers and other structures have rules of their own. This explainer covers the two most common forms; counsel will advise which structure fits a given deal.

Side-by-side comparison of what transfers#

The comparison below summarizes how the most common data questions usually play out. Individual agreements can change any row, so treat it as a map of issues to raise, not a set of answers.

How an asset purchase agreement defines the data#

An asset purchase agreement defines the data through its lists of purchased and excluded assets. Look for definitions of books and records, customer lists, supplier lists, business information and intellectual property, and check that they reach electronic records in the WMS, TMS and ERP rather than only paper files.

Exclusions matter just as much. Sellers commonly keep tax records, records about excluded assets, privileged communications and records they must retain by law, and the agreement may let the seller keep copies of transferred records for those purposes under a confidentiality covenant.

• 1Confirm that purchased records include system data and archives, not just current files.
• 2Check whether history from former customers is included or excluded.
• 3Look for a covenant limiting how the seller may use retained copies after closing.
• 4Note any transition services arrangement in which the seller keeps running systems for a period.
• 5Agree who receives system exports at closing, and in what format.

Customer lists, personal data and privacy carry-over#

Customer lists in an asset sale are often the most valuable records and the most constrained. Many privacy notices say that customer data may transfer in a merger or sale of assets, and that wording matters; where a notice made narrower promises, those promises may limit what the buyer receives or how it may use the data.

For B2B distributors and 3PLs, much of the customer data is business contact information, but consumer delivery addresses, ship-to records and driver or employee files can be personal information. State privacy laws may apply to the transfer depending on the facts, and those questions are assessed deal by deal with counsel.

A 3PL's client data adds a further layer. The 3PL may not own its clients' records at all, so it can pass them on only as far as each client agreement allows, and a contract that is not assigned can trigger return-or-destroy obligations.

Stock deals still carry data questions#

A stock deal avoids most assignment problems but not every data question. Change-of-control clauses in client agreements and software licenses can give the counterparty a right to terminate, renegotiate or receive notice, and obligations stay too: past use of client data, existing licenses and privacy commitments keep binding the company the buyer now owns.

That is why buyers in stock deals ask for representations about data. Expect to confirm that the company has complied with its contracts and privacy notices, holds the rights to use its records as it does, and has disclosed every data license. Documentation that supports those answers is worth assembling before the letter of intent.

Illustrative: a distributor sells one division#

Illustrative: a fictional industrial distributor runs a bearings and power transmission division alongside its core MRO business, all on one Epicor instance. It agrees to sell the division to a strategic buyer through an asset sale, while the rest of the company stays with the founding family.

Counsel defines purchased records as the division's customer accounts, order history, quotes and supplier records, extracted from the shared ERP by division code. The family company keeps copies for tax and warranty purposes under a confidentiality covenant. Customers on signed supply agreements receive consent requests, while transactional customers move to the buyer's terms going forward. The company had earlier licensed de-identified order exception records from both divisions; that license stays with the seller, and the agreement records that division records delivered before closing remain within it.

Data questions to settle early in either structure#

Data questions are easier to settle at the letter-of-intent stage than in the final week before closing. Raising them early lets counsel draft definitions that match how the business actually stores its records.

• 1Which systems and archives hold the records, and which entity owns each subscription.
• 2Whether history from former clients and customers transfers, stays or is deleted.
• 3Which consents are conditions to closing and which can follow afterward.
• 4How existing data licenses, vendor data-sharing terms and benchmark programs are disclosed and treated.
• 5What copies the seller keeps, for which purposes and under what confidentiality terms.

How SourceX approaches records after a sale#

SourceX treats the supplier as the entity that holds the records and the rights at the time of the license. In the Rights stage of the SourceX five-step transaction, a company that was acquired, sold a division or bought assets from another business maps which records it holds, under which agreement, and with which limits.

That analysis is recorded in the SourceX Evidence Packet under provenance and licensing rights, so a later acquirer, lender or buyer of the data can see how each package was supported.