[csomar]

The contract should specify. The contract probably was sided on smytes favor. Screwing even paying customers.

You can have a contract where you specify indemnification of damage in case the business ceases operations, goes bankrupt, get acquired, etc...

[koliber]

A guarantee is only as good as the guarantor. A guarantor can be a company providing a service, as well as all sorts of assorted guarantees about said service.

In time, the situation can change. The product can get sold. Cash can be spent. The guarantor can no longer make good on its guarantees.

You're back to square one where the guarantees are as worthless as the original service.

You need 3rd party backing (insurance) in such situations, but that costs money. This money is a cost which makes competing against unbacked entities tougher.

In most cases, you can not have 100% foolproof guarantees of anything. The closest I can think of is governments standing behind their banking institutions. Even there though, governments have defaulted on their guarantees.

The world is not a stable, perfect, and cut-and-dry place as many would like to believe. It is dynamic, and ultimately backed by trust.

[raesene9]

It's much harder to mitigate this kind of risk in the world of services as against purchased software.

The problem has always been present especially when larger slower moving companies buy from smaller, riskier, companies.

In the days of software, code escrow was possible to mitigate some of this kind of risk. That's still got it's costs but can be an effective hedge against a supplier going bust.

[TheSpiceIsLife]

The parent comment is justified.

While you can have a contract that indemnifies that isn’t going to help your going concerns when the other party just pulls the plug.

[rocqua]

I think company bylaws that prevent a 'triangle merger' like this might be useful.

[unilynx]

what's stopping the company owners -who are generally the ones executing such a merger- from changing the bylaws ?