Bell Canada recently announced that it would acquire The Source, a national electronics dealer. Bell has indicated that it will be acquiring substantially all of the assets of The Source.
I don’t know what those assets will be, but I think it is an interesting example of the fact that even in recessions we still see acquisitions of companies. When an organization’s assets are bought, one of the most valuable assets that are purchased is often its customer list.
PIPEDA and other applicable privacy laws, of course, govern transactions involving personal information. In the course of such transactions some companies are now implementing concepts once used only to secure physical assets. For example, many organizations are choosing to employ “escrow” arrangements to ensure the security of personal information.
Most businesses now understand that the implications of violating applicable privacy laws can be very serious to the reputation and bottom line of both the vendor and purchaser. As part of a sale of a customer list, and depending on the specific circumstances, both parties may agree that the customer list be placed in escrow until the transaction is completed. This ensures that what is likely the most valuable asset in the transaction – the customer list – is protected from unintended disclosures prior to the actual transfer of the business.
How do you arrange an escrow of the customer list?
Does the business actually give the customer list to a third party escrow agent or trust company to hold and release on closing, or is it just part of the information that is “held back” during the due diligence process when the proposed purchaser is investigating the business, like trade secret information?