Templates

Asset Purchase Agreement

This asset purchase agreement template is an agreement for the sale and purchase of a business and its assets (but not shares) and is the main transaction document to effect the transfer of a business and its assets. Read more
Legislation GB-EAW
Topics Updated on 22 Nov 2022

What is an Asset Purchase Agreement?

A business sale can take effect in two main ways - (1) through the sale of shares (See our Share Purchase Agreement Template); or (2) through the sale and transfer of a business and its assets.

This asset purchase agreement template is an agreement for the sale and purchase of a business and its assets (but not shares) and is the main transaction document to effect the transfer. It can sometimes be known as a “Business Transfer Agreement” or “Business Purchase Agreement”, and you can change the template's name to either of these if you prefer.

This asset purchase agreement usually follows the agreement of “heads of terms” which set out the agreed commercial terms between the seller and the buyer.

What information does an asset purchase agreement include?

Key provisions: The key elements of the asset purchase agreement are:

  • setting out the parties to the transaction, which assets are being sold (and which are excluded) and for how much;
  • how the business’ debts and creditors are apportioned before and after completion of the sale between the parties;
  • the obligations of the parties on completion and post-completion (including areas such as confidentiality and restrictions on the seller competing with the business post-completion); and
  • allocation of risk – the seller provides contractual warranties about key areas of the business being sold (as English law principle of “buyer beware” applies to such a transaction and therefore a buyer has little common law or statutory protection regarding the business it is acquiring – it’s for the buyer to carry out its due diligence). The warranties provide the buyer with a post-sale remedy if any of the warranties (which have not effectively been disclosed against) are incorrect and the value of the assets are reduced as a result. The warranties therefore provide a mechanism for retrospective price adjustment operating as a claim for damages resulting from a breach of contract.

Optional extras: The asset purchase agreement also includes optional provisions relating to the transfer of stock (including valuing that stock), book debts and employees, where those transfers are included in the structure of the transaction. It can be fully tailored to the specific details of your transaction.

Customised to meet your needs

Clearly defined assets: The asset purchase agreement includes a schedule where you can list the assets (e.g. equipment, stock, intellectual property rights, software, contracts) that are being sold and purchased. The schedule can be fully customised to reflect the particulars of the sale, including by listing the apportionment of the purchase price that applies to each asset. This means that only the assets that are agreed as being purchased will be transferred, and other assets in the business will not.

Different parties: Asset sales usually take place between two single entities (i.e. one buyer and one seller). However, in some circumstances, there may be multiple buyers or sellers, and the template asset purchase agreement allows for this situation. For example, this could be where an unincorporated partnership is selling the business and assets of that partnership, so each partner will need to be a party to the asset purchase agreement as a seller. The template also allows for both individual and corporate sellers and buyers.

Assumptions: This agreement assumes that: (1) there will be a simultaneous exchange and completion; and (2) the business being sold does not occupy any property, the freehold or leasehold title to which is to be transferred to the buyer.

This agreement is not suitable for an intergroup reorganisation.

Why Docue?

With Docue, you can create a top-quality asset purchase agreement in minutes. The service includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs.

Signatures can be collected electronically, and all contracts you make are saved in your company's own contract account.

Tags: business transfer agreement, business transfer agreement template, asset purchase agreement template, transaction documents, APA, BPA, asset sale, business and asset sale

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Legislation GB-EAW
Topics Updated on 22 Nov 2022

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