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Taking over customer base in business takeovers

In a merger or acquisition, the customer base is also of value. For a buyer, the acquisition customer base is attractive and especially valuable. Taking over the customer base during a business takeover ensures that the value of accumulated goodwill is preserved. This makes the new start much easier. However, there are laws and regulations in force that the buyer must take into account when taking over a company’s customer database.

Customer acquisition benefits

By taking over the customer base when buying a business, contacts with existing customers are maintained. This gives the buyer an instant overview of contacts that can be approached for sales. Turnover can therefore be generated easily and quickly. In addition, the new owner also benefits from the good reputation built up by the purchased business.

Customer acquisition: laws and regulations

Nowadays, strict laws and regulations apply to the processing of personal data from the customer base. Since 2018, the AVG is applicable. The acquisition of a customer database is assessed by the AVG as a ‘further processing of personal data’. And any processing must be lawful.

Data processing in the AVG

Proper processing of personal data when taking over the customer base is the responsibility of the selling party.  This is considered “further processing of personal data”. Article 6 of the AVG provides several grounds for lawful processing of personal data. The grounds that may apply in case of a company takeover and take over a customer base are so-called consents legitimate interest, similar to the former Personal Data Protection Act.

Requirements customer database takeover from AVG

A selling party can theoretically ask customers for permission to transfer data prior to a possible merger or takeover. In this situation, this is done through the privacy declaration or a privacy statement. In practice, however, asking this permission causes the necessary ‘upheaval’ or confusion among existing customers. Moreover, the AVG imposes strict requirements and conditions for obtaining this consent when taking over a customer database.

Legitimate interest

First and foremost, obtaining consent for the transfer of a customer database in the event of a business takeover requires a legitimate interest. In the case of an acquisition – and certainly when this involves taking over a customer base – a buyer can invoke this in many situations. The main condition for obtaining the legitimate interest is that the (commercial) interest of the buyer outweighs the privacy interests of the parties involved. However, additional requirements apply here, such as informing about the takeover, and retention periods must be strictly complied with.

Valuable legal advice on company takeovers

Taking over the customer base in the event of a business takeover, merger or bankruptcy is far from always a matter of course. In addition, the selling party is expected to inform existing customers about a possible sale of the company in a proper and transparent manner. The corporate lawyers at Fruytier Lawyers in Business specialise in privacy legislation in mergers and acquisitions. They will be happy to assist you with focused and committed legal advice around acquisition processes and privacy legislation.

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