Here are the parts of an asset purchase agreement that you may want to include in your document. An asset purchase occurs when a buyer agrees to buy certain liabilities and assets of a business. As such, it also means that the buyer assumes the benefits and risks of buying the asset or business. While it may seem obvious that the purchased thing needs to be identified, the key here is to be as specific and descriptive as possible. For land, this means giving the exact description of the land as it is recorded in the land registers. This may include the area, buildings, and space available for parking or the building. When considering an asset purchase agreement to formalize the sale of a business or asset, you should consider the pros and cons before deciding to use this type of document. Check the pros and cons below. The terms described in this article are intended to give you an understanding of what to expect in a Florida securities purchase agreement.
A sale or purchase of assets is a special event that is not always in the normal course of business. You can consider other important concepts when negotiating or thinking about the structure of a company. After the signing page of an APA, you will likely find a number of exhibitions and schedules that include copies of agreements and other related information. Schedules often include descriptions of additional assets or details of the parties such as: A good contract to buy and sell assets is incomplete without termination provisions. These terms provide a roadmap for the parties in the event that events occur that require the cancellation of the sale of assets. A termination section identifies the different reasons that would allow a party to terminate and explains the parties` additional rights and obligations during this process. The correct identification of the parties to the agreement is essential, especially for companies that may have several independent subdivisions. It is important to correctly identify the company entering into the agreement. Closing occurs when the transaction is formalized.
Closing conditions should define what is necessary to complete the purchase or sale of the company or the assets of the business, including all terms and contingencies. Decide if you also need to make closing price adjustments. These changes can occur based on interest, balance sheet differences, working capital, depreciation – or when the asset depreciates over time – and the value of the net asset. Decide who will also take care of the taxation and how the transaction will be characterized in terms of real estate and others. Manage as many details as possible. Every good company needs to know its contracts, especially in terms of assets. You want to make sure you get the highest value when you buy or sell assets that may include land, vehicles, or equipment. Therefore, it is good to know all the terms and how to make the most of the written details. I am a New York Licensed Attorney with over 6 years of experience in drafting, reviewing and negotiating a variety of contracts and agreements. I have experience in sports and entertainment, real estate, healthcare, estate planning and with start-ups.
I am confident that I can help you with all your legal needs. An asset purchase agreement is exactly what it looks like: an agreement between a buyer and seller to transfer ownership of an asset at a price. The difference between this type of contract and a M&A is that the seller can decide which specific assets to sell and exclude. A merger or acquisition must dispose of all the assets involved. The scope of due diligence also varies depending on the asset and the parties involved. To facilitate due diligence and closing, a checklist for stock and asset purchase agreements is often a useful tool. Either way, during a typical due diligence period, you can see the following: One of the most important things that needs to be included in an agreement are the things that one of the parties relies on as part of the transaction. Most of them go to the „Representations and Warranties“ section and cover topics such as warranties regarding the suitability of the product for a particular purpose, the condition or quality of the items sold, and the legal status of the parties entering into the contract. The representations and warranties contained in an asset purchase agreement are the statements and promises of the buyer and seller that everyone relies on to accept the transaction. You may be familiar with the warranties associated with buying a home or appliance – the same principles apply. An arrest warrant is simply a promise to do something. For example, a seller can guarantee that the asset will be audited or valued before the closing date.
While there are drawbacks to an asset purchase agreement, there are several distinct advantages, including: Due diligence is a legal term that refers to a discovery process where the buyer receives information about the seller`s assets to ensure they get what they paid for in the agreement. Of course, the price is an essential part of the agreement, but just as important are the terms of payment. For example, if it is a transaction that constitutes seller financing, the buyer can transfer part of the purchase price at closing and at the same time sign a promissory note for the rest of the purchase price. Similar to a warranty, a representation is simply a statement of fact to which a party certifies its accuracy. The parties to an APA rely on these statements when concluding the agreement. Here are some common statements in connection with a sale of assets: When a termination event occurs, the party terminating the business is generally required to provide appropriate notice (as defined in the agreement) and the parties may be required to perform other obligations to wind up the business. How will the buyer ensure that he gets a good property from the assets purchased? There are promises that both parties are likely to make to each other. The guarantees are the insurances associated with the purchase.
If the seller provides unfounded warranties, this section is essential for the buyer to seek redress. Asset purchase contracts are often complex, time-consuming and filled with dense legal German. Choosing the right legal counsel is a crucial step in executing a successful asset purchase. Cueto Law Group`s lawyers pride themselves on their ability to meet the legal and business needs of their clients in these transactions. In addition, you may hear the term „share purchase agreement“ instead of „securities purchase agreement“ when it comes to a business sale. .