What happens to gift cards and store credit when a retail business changes hands?

Outstanding gift cards and store credit represent real obligations to customers, and they don't disappear just because the business is sold; how they're handled depends on deal structure and on what the purchase agreement specifically says. In a share sale, the same corporation continues to exist, so its obligation to honour outstanding gift cards and credit generally continues automatically along with everything else the business owes and owns. In an asset sale, this liability doesn't automatically transfer to the buyer; it needs to be specifically addressed, since a buyer might otherwise refuse to honour cards issued by a seller that no longer legally exists in the same form, leaving customers with a legitimate grievance and no easy recourse.

From a deal-value perspective, outstanding gift card and credit liability is also something a buyer should quantify during due diligence, since it represents money the business has already collected but still owes in future goods or services, which affects the real value being exchanged. Negotiating whether the buyer assumes this liability, and adjusting the purchase price accordingly, avoids a dispute over who's responsible for redemptions that come in after closing.