Corporate News: A Legal Update

When a business owner sells only part of their company, social media accounts are too often treated as an afterthought. Yet these accounts are an overlooked asset holding enormous value: brand recognition, customer goodwill, and a strong existing audience that both sides of the transaction may expect to use after closing. 

In scenarios where one location, division, or product line of a business is being sold while the rest is being retained, a single social media account for the entire business can quickly turn an otherwise straightforward transaction into a dispute over ownership, control, and brand identity.

Why Social Media Assets Complicate Partial Business Sales

In a partial sale, the “business” being sold may include tangible assets, intellectual property, customer relationships, and goodwill. Social media accounts often blur these categories. A well-established presence will often include loyal followers and customers, years of content and engagement data, customer contacts, and name recognition tied to the brand.

While digital assets such as website domains and online branding are often addressed early in the process of a partial business sale, social media accounts present a thornier issue. Many platforms make it difficult or impossible to segregate follower lists, customer information, and historical engagement data. If not addressed early on, buyers and sellers alike may view the single social media account as an asset they expect to control after closing.

Key Factors to Address Early When Dividing Social Media Assets

Shared Brand Identity

The first step is clarifying what, exactly, is changing hands in the transaction. A single social media account may have historically promoted the business being sold and the business the seller intends to continue operating. Both sides of the transaction should consider which part of the business their social media accounts primarily promote. If an account historically marketed multiple product lines or divisions, it may not map neatly onto the transaction structure.

This raises practical questions for the parties: Is the account itself an asset of the business being sold? Is it tied to a broader brand the seller intends to keep? Or does it function as a shared marketing platform for multiple parts of the business?

Platform Restrictions on Ownership and Control

Unlike traditional assets, social media accounts are governed primarily by platform terms of service rather than property law principles. Some platforms may restrict or prohibit outright transfers of accounts between parties. As a result, what parties describe as the “sale” of a social media account may technically occur through the transfer of login credentials rather than a formal assignment. This creates potential risk if transaction documents promise rights that platform policies do not permit.

Informal Control and Access

There are also internal ownership issues to address. Many businesses operate accounts registered in the name of a founder, employee, or marketing contractor, with credentials shared informally across teams. If these issues are not addressed before closing, a buyer may discover that the seller does not have clear control over the account it intended to transfer.

Practical Strategies for Dividing or Transferring Social Media Accounts

There is no one-size-fits-all solution, but several practical approaches tend to work when planned in advance.

• Buyer assumes control. It may be appropriate for the buyer to take over the existing account when it primarily supports the sold business.
• Seller retains control. Where the account supports the broader brand, the seller may want to retain the primary account while the buyer launches new accounts dedicated to the acquired business. Transitional messaging can help direct followers to the new accounts and clarify any changes to customers.

Sorting out which contacts and follower groups relate to each party can be time consuming. These lists are often viewed by buyers as valuable intangible property tied to the goodwill of the acquired business, while sellers may view them as inseparable from the broader brand they are retaining. One thing is certain—the parties should address how these accounts are divided as soon as possible in the transaction, as putting this off until closer to closing is likely to invite problems or potentially delay closing.

Legal Considerations for Allocating Digital Assets

From a legal perspective, social media assets should be addressed with the same precision as other intangible assets in the transaction. Purchase agreements should clearly allocate ownership of social media accounts, handles, related content, login credentials, and associated analytics data. In some cases, the parties may also include transitional obligations requiring announcements, redirects, or cooperation in launching replacement accounts.

Best Practices for Managing Social Media in a Partial Business Sale

Owners contemplating a partial sale should:

1. Inventory all social media accounts early in the deal process; and
2. Evaluate how each account supports the part of the business being sold.

Doing so allows parties to align the treatment of digital assets with the overall brand and trademark strategy for the transaction while reducing the risk of confusion or disputes after closing.