What is an Asset Purchase Agreement ?
An asset purchase agreement template (APA) is a contract between a buyer and a seller that spells out the terms and circumstances of a company’s asset purchase and selling. It’s vital to understand that in an asset purchase agreement deal, the buyer does not have to buy the entire company’s assets. It’s not uncommon for a buyer to exclude specific assets from an asset purchase agreement. Payment of the purchase price, monthly instalments, liens and encumbrances on the assets, and other provisions of an asset purchase agreement may be included. The buyer of an asset purchase agreement must select specific assets while avoiding redundant assets.
Why use an Asset Purchase Agreement ?
When opposed to using an equity (or stock) purchase agreement or a merger agreement in a merger or acquisition transaction, asset purchase agreements have a separate set of advantages and disadvantages. In an equity or merger transaction, the buyer is assured to obtain all of the target’s assets, but he or she also assumes all of the target’s liabilities. An asset purchase agreement, on the other hand, not only allows for a transaction in which only some of the assets are transferred (which is sometimes desired), but also allows the parties to negotiate which of the target’s liabilities are expressly assumed by the purchaser, and which liabilities the purchaser does not wish to accept (or does not know about)
Format: Microsoft Word (.doc) (.docx)
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