Auction design could streamline TikTok's US asset sale

Auction design could streamline TikTok's US asset sale

Brad Miller, Margarita Patria, Kalin McGowan
Auctions & Competitive Bidding

In August, President Donald Trump signed an executive order mandating that TikTok either: (1) sell its U.S. operations and transfer TikTok's American user data to U.S. servers by mid-September or (2) cease transactions within the U.S. Prior to the executive order, the Chinese internet company ByteDance Ltd., the owner of TikTok, already had received inquiries to be acquired. The mechanics of this potential sale and the underlying bidding structure are cloaked in mystery, which is not unusual but likely will not maximize the value of the assets in play.

Business insiders often presume that the asset sales process they face, like the sale of TikTok's U.S. assets, does not lend itself to a structured auction approach and that the best results can be achieved only by conducting the sale in rounds of negotiations behind closed doors. But the reality is that participants in a complex asset sale with multiple stakeholders and dueling government oversight can benefit from a streamlined, structured approach. In this Law360 article, the authors discuss how to encourage participation and ensure the bidding process is fair, transparent and efficient.

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