Verizon Acquisition of Alltel Closes January 9 > Upcoming changes?

reply to battleop

Re: Upcoming changes?

The contract should have language that says what they can and can't do if they sell the customer or company.

It does but it doesn't have to.

It does, becuase it says they may modify the terms of the agreement. I've been through this round and round with my own attorney through the whole Sprint EVDO change.

Second, Federal law makes it clear that when you purchase a company you purchase all liability. Contracts ARE liability. Because of that, the purchaser, VZ in this case, assumes all liability for the contracts in place which is why due diligence must be done in advance and prior to making any purchase. Those contracts they purchase will have an impact on the ongoing operations of the company after purchase..

The contracts are part of what gives the company value.

"Second, Federal law makes it clear that when you purchase a company you purchase all liability"

I've bought commercial buildings in the past where the seller was responsible for some of the preexisting debt. I don't think you have to take all of the liabilities. If you don't the seller must take care of them. In our case the seller took proceeds from the sale to pay off the debts.

You can't sell a company and shed debt like it were a bankruptcy.

That's a little different when it comes to buildings on a local level. We're talking about a company, however, that operates under federal guidelines.

In these cases, debt can be negotiated - even the same as your own. Contract law isn't cut and dry.. usually businesses that operate under regulation is a little different. And, to be honest, in many cases, you can sell a business and shed debt. If you don't do due diligence before you buy, you can in fact get stuck with a really bad deal.

Again, nothing is cut and dry and things can be negotiated.. Hell, you can buy a house in some areas and the day you move in, you have a $600 water bill from the former owner.. where other areas, it's tied to the owner. Just all depends on a few factors, really.. so I'll admit that its not cut and dry.. but in the case of this merger, the contracts have to be honored. They are contracts that were negotiated between a business and a consumer, so in a sense, you're buying the customer in addition to the hardware and physical structures. Usually when a sale is done, it's also talked about in how much per customer it cost to buy the business.