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When you want to sell your business, you collate the valuable assets you own to determine your selling price. When selling, one potentially valuable asset is your customer database. Your database collates details about your existing customers, which can be extremely useful for potential buyers. Therefore, it may be a point of value for your business. However, your customer database will contain personal information about your clients. Consequently, you need to handle consumer data according to privacy law, which will affect whether you can sell your client database at all. Therefore, this article will explain whether you can sell your customer database when selling your business.

What Personal Information Does My Customer Database Contain?

Personal information is any data you can use to identify a living person, whether by itself or in combination with other information. This definition is broad and can contain many different kinds of data. Therefore, your customer database will likely vary depending on the industry you are in. Your customer database may include personal information such as:

  • customer names;
  • customer delivery addresses;
  • email addresses;
  • financial information, such as accounts;
  • payment history;
  • sales history;
  • customer preferences
  • mobile numbers; and
  • past communications identifying the customer.

A comprehensive customer database allows your business (or a potential buyer) to: 

  • identify customer trends;
  • track customer loyalty;
  • give better customer service;
  • target your marketing; and
  • deal with customer complaints and feedback more efficiently.

To achieve this efficiency, customer databases store a lot of personal data about your clients in one place. For example, an accounting firm’s customer database will include sensitive personal information about their clients’ financial affairs.

Meeting Your Privacy Obligations

To comply with the law, you need to fulfil your privacy obligations that regulate how you deal with your database, including how you:

  • collect information for it;
  • use the information you have collected;
  • store and secure your database; and
  • share this database with other parties.

You should therefore prioritise protecting the personal information of your clients and value their privacy rights. It is your responsibility to ensure your clients’ personal information is secure throughout the selling process.

Collecting Personal Information for Your Database

When you collected personal data from your clients for your customer database, you had to tell them why you were doing so and what you would use that customer information for. Subsequently, you can only use the collected data for the reasons you told your customers at that time. Your privacy policy should contain a summary of this information. 

Furthermore, your database should only contain personal information necessary for legitimate business purposes, such as physical addresses for completing delivery. If any of the customer data in your customer database is unnecessary, you should dispose of it securely before sharing it with a third party.

Sharing Personal Information

If you did not tell your clients that you would use their personal information as an asset when selling your business, you cannot sell your customer database in this way without their consent. When using or sharing personal information, you cannot do so outside of the reason you collected it unless:

  • you have permission from the person the personal information is about;
  • sharing or using it in this way was within your intended purposes, and you told customers this;
  • it is directly related to your original collection purpose; or
  • the law requires it.

Therefore, if you want to sell your customer database as a part of your business assets, you need to get the consent of every customer in that database to do so. If you told customers that you would use their information in this way at the time of collection, then you do not need to get their consent again.

You may contact them by email or perhaps phone them if your database is small enough. If they do not allow you to include their personal information, then you need to take that customer’s details out of your database.

Be sure to include that you have received customer consent to share their information when pitching your price to buyers. They may be willing to pay more for a database of this kind because it means they do not induce potential privacy liabilities for operating with personal information in this way.

Selling Your Customer Database Without Consent

If you do not get customer consent to include their information in the client database you are selling, you are interfering with their privacy. Therefore, they can complain to the Privacy Commission because you have breached the Privacy Act’s principles. You may then face fines or legal proceedings in the Human Rights Review Tribunal.

Key Takeaways

Your customer database contains the personal information of your clients and customers. Therefore, if you want to sell it, you need to get the consent of the people whose customer data your database contains. If you would like more information or help with your privacy obligations and selling your customer database, contact LegalVision’s data, privacy, and IT lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can I sell my customer database as an asset?

You can sell your customer database as long as you have consent from every customer in that database to share their personal information. Otherwise, you run the risk of breaching privacy law.

What personal information does my customer database hold?

Personal information is anything that can identify a person. Therefore, your customer database will contain various different kinds of personal information, such as customer names, email addresses, and financial details.

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