Social Media Assets in M&A Transactions

A company’s social media pages and profiles, and associated followers, friends and other connections, may constitute valuable business assets. However, social media assets often receive little attention in M&A transactions. Purchasers generally require sellers to make robust representations and warranties regarding the target company’s assets, but a typical purchase agreement may give social media assets only cursory treatment or not explicitly cover them at all.

This article outlines a set of representations and warranties that a purchaser may consider as ways to address a target company’s social media assets. Purchasers will need to determine in each case how comprehensive the representations and warranties should be, based on the particular circumstances of the transaction.

The author’s list concludes with the following representation: “The contemplated transaction will not result in the loss or impairment of the target company’s ability to use, operate or maintain any social media account or social media account name, or in the breach of any terms of use, terms of service or other agreements or contracts applicable to such social media accounts.”

The term “assets” in relation to a company’s social media pages and profiles is used advisedly, given that their legal status as property is tenuous at best. In almost all cases, they could be taken away by the third-party operators of the relevant social media platforms. But the issues addressed in the article have arisen repeatedly in reported cases.