Stock purchase vs asset purchase: what happens to data rights

What is the core difference for data?#

The core difference is what the buyer acquires. In a stock purchase, the buyer acquires the equity of the target company, and the company keeps owning everything it owned before closing, including its databases, system accounts, contracts and obligations. In an asset purchase, the buyer acquires specific assets from the seller, and anything not identified in the agreement generally stays behind.

For a general counsel, that means two different diligence questions. In a stock deal the question is what restrictions the company already carries. In an asset deal it is also whether the records and the rights to use them were actually transferred and documented.

What carries over in each structure#

The table compares how common data-related items are typically treated. It describes general patterns only; the purchase agreement, the underlying contracts and applicable law decide the actual result in each deal.

Two rows cause most surprises in asset deals. System accounts look like a technical detail, but a CRM or helpdesk subscription is a contract in the seller's name, and losing it can mean losing the history inside it. Seller copies matter later: a buyer that plans to license records exclusively cannot easily do so if the seller kept an unrestricted copy of the same archive.

Where asset deals lose data#

Asset deals lose data when the schedules describe the business but not its records. A purchase agreement can list equipment, inventory, trade names and customer contracts in detail and still say nothing clear about the CRM history, the helpdesk archive or the shared drives that hold years of project files.

Other gaps are practical. The seller's SaaS subscriptions may be in its own name and lapse after closing. Excluded assets may include a parent's shared systems in a carve-out. A transition services agreement may provide access for a limited period without any obligation to export history. And unless the agreement says otherwise, the seller may keep copies of transferred records, which can affect any later exclusivity the buyer wants to offer.

Restrictions travel with the records#

Restrictions travel with the records in both structures. A buyer of the company, or of its assets, generally takes records subject to the promises made when they were collected: privacy notices given to customers and website visitors, confidentiality clauses in customer contracts, employee notices about monitoring, and vendor terms that govern data held in their platforms.

Transfers of personal information deserve particular care in asset deals. Depending on what the seller's privacy notice said and where customers live, state privacy laws such as the CCPA and consumer protection rules may apply to the transfer and to later uses. Which laws apply, and what they require, is assessed deal by deal with counsel.

Regulators have shown how they view consumer data in a sale. In a May 2015 letter about the RadioShack bankruptcy sale, the FTC's consumer protection director recommended that customer data not be sold as a standalone asset and that it go only to a buyer in substantially the same line of business that agrees to be bound by the existing privacy policy. That was a bankruptcy matter with consumer records, but the logic is a useful test for any asset deal: the promises made at collection tend to follow the records.

Mergers and change-of-control clauses#

Mergers are a third structure with their own effects on data. In many mergers the target's assets and obligations pass to the surviving entity by operation of law, and in a reverse triangular merger the target survives as a subsidiary, which resembles a stock purchase for data purposes.

Whether a merger or stock sale counts as an assignment under a particular contract depends on that contract's wording and its governing law. Some customer and vendor agreements define a change of control as an assignment requiring consent; others are silent. Read the clause in each material contract rather than relying on the structure alone.

A data rights checklist for the deal team#

The checklist below covers the data items deal counsel should confirm before signing, whichever structure is used. Answering them before closing is much easier than reconstructing them when a data license or a later sale raises the question.

• 1Identify which legal entity holds each system, account and record family.
• 2In an asset deal, list databases, books and records, system accounts and data rights in the transferred assets schedule.
• 3Confirm whether the seller may retain copies, and for what purposes.
• 4Map anti-assignment and change-of-control clauses in material customer and vendor contracts.
• 5Collect the privacy notices and employee notices in force when records were created.
• 6Check vendor terms for account transfer and export rights.
• 7Set export obligations and formats in any transition services agreement.
• 8Record existing data licenses the target has granted and whether they need consent to survive.

Illustrative: two add-ons, two structures#

Illustrative: a fictional logistics platform buys two add-ons in the same year. The first, a freight brokerage, is acquired by stock purchase. Its TMS history, load board records and carrier communications stay with the brokerage entity, along with its customer contracts and privacy notice, and nothing needs to be assigned. Counsel checks two large shipper agreements with change-of-control clauses and obtains consent.

The second, a family-owned warehouse operation, is acquired as assets. The first draft of the agreement lists racking, forklifts and customer contracts but not the WMS history. Counsel adds books and records, the WMS database and system accounts to the schedule, limits the seller's retained copies to tax and legal purposes, and requires a full export in the transition services agreement. A later licensing review finds both histories documented and owned by the right entities.

How SourceX reviews deal structure during rights review#

SourceX looks at deal structure in the Rights step of the SourceX five-step transaction: Supply, Rights, Preparation, Approval and Delivery. For acquired companies, the review asks which entity holds the records, how they arrived there and which acquired contracts still limit their use.

The answers are recorded in the provenance and licensing rights sections of the SourceX Evidence Packet, so a buyer of the license and any future acquirer of the company can see the chain from the original business to the current supplier.