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Kind of depends on the terms of the deal, namely whether it's an asset deal as opposed to a stock deal. In the latter Twitter would assume liability for contra

Kind of depends on the terms of the deal, namely whether it's an asset deal as opposed to a stock deal. In the latter Twitter would assume liability for contracts. In the former they just acquire IP and hire away the employees. Acquirers usually prefer asset deals for this reason as it allows them to leave unpleasant liabilities behind. There's generally some sort of shell left that goes through wind down but it has few/no assets attached. In this case you can try to go after the original investors including founders or other shareholders (the IRS may do this if there tax issues) but since there's nobody home you are less likely to get much out of a favorable judgement.

heavenlyhash 8y ago
This seems like the kind of thing a legal system should be designed to help defend the market against. It's a net negative to the economy as a whole to let torpedoes like this fly without consequence; and evidently, a totally Laissez-faire market will engineer ways to insulate the perpetrators against the damages rather than the insulate economy as a whole against the splash.
- hodgesrm 8y ago
  On the flip side asset deals also let acquisitions proceed that would otherwise be blocked due to uncertainty about liability, which is another way of saying that the acquirer can't properly assess value of the investment. I have been through this process and have some experience with the type of issues that can arise--in our case they had nothing to do with screwing customers. It's possible Smyte would have just disappeared anyway. Moreover recovering damages in this kind of case is time-consuming, doubtful, and too late to fix anything. (Like closing the door after the horse is gone.) What's left is reputation--the names of the founders of Smyte are listed at https://www.crunchbase.com/organization/smyte https://www.crunchbase.com/organization/smyte. I would have some pretty hard questions if they ever showed up in a deal or looking for work. p.s., According to the Techcrunch page "Smyte stops bad actors on marketplaces and social networks." You can't make this stuff up.

heavenlyhash 8y ago

This seems like the kind of thing a legal system should be designed to help defend the market against. It's a net negative to the economy as a whole to let torpedoes like this fly without consequence; and evidently, a totally Laissez-faire market will engineer ways to insulate the perpetrators against the damages rather than the insulate economy as a whole against the splash.

hodgesrm 8y ago
On the flip side asset deals also let acquisitions proceed that would otherwise be blocked due to uncertainty about liability, which is another way of saying that the acquirer can't properly assess value of the investment. I have been through this process and have some experience with the type of issues that can arise--in our case they had nothing to do with screwing customers. It's possible Smyte would have just disappeared anyway. Moreover recovering damages in this kind of case is time-consuming, doubtful, and too late to fix anything. (Like closing the door after the horse is gone.) What's left is reputation--the names of the founders of Smyte are listed at https://www.crunchbase.com/organization/smyte https://www.crunchbase.com/organization/smyte. I would have some pretty hard questions if they ever showed up in a deal or looking for work. p.s., According to the Techcrunch page "Smyte stops bad actors on marketplaces and social networks." You can't make this stuff up.