Asset Purchase Agreement

Asset Purchase Agreement: Buy or Sell Business Assets on Clear Terms

An asset purchase agreement is the contract for the sale of specific assets, or a whole business, from a seller to a buyer. It sets out exactly what is being sold, the price and how it is paid, when the sale completes, which liabilities and contracts the buyer takes on, what happens to any employees, the seller's promises about the assets, and any restrictions on the seller after the sale. Robot Lawyer drafts the agreement from your answers, for the law of the country or state you choose, and on the Verified plan a qualified legal professional checks it within 24 hours before you sign.

CONTENTS

What Is an Asset Purchase Agreement?

In an asset purchase, the buyer chooses the assets it wants, such as equipment, stock, intellectual property, goodwill, customer lists or contracts, rather than buying the company that owns them. The buyer usually takes on only the liabilities it agrees to.

That makes an asset purchase a common way to buy a business, part of a business, or valuable equipment, and the agreement records exactly what moves to the buyer and what stays with the seller.

When Should You Use One?

• Buying a business
  Taking over a business's assets and goodwill rather than its shares.
• Selling part of a business
  Selling a division, product line or set of equipment.
• Buying equipment or stock
  Larger purchases where you want clear title and promises.
• Paying in instalments
  Spreading the price over time with protection if a payment is missed.
• Transferring staff or contracts
  Where employees or customer contracts move to the buyer.

What's Included in Your Agreement?

• The parties and the assets
  The seller, the buyer, and the assets being sold, with any excluded assets.
• Price and payment
  The price, VAT or sales tax, and payment in full or by instalments.
• Completion
  When the sale completes and when ownership and risk pass.
• Liabilities and contracts
  Which liabilities and contracts the buyer takes on.
• Employees
  What happens to any employees who work in the business.
• Warranties
  The seller's promises about title and the condition of the assets.
• Restrictions and confidentiality
  Limits on the seller competing after the sale, and protection of the deal's details.
• After completion
  Any handover, training or support.

What Your Document Looks Like

Your agreement is a numbered contract: the parties and background, definitions, the sale and purchase, the price and payment, completion, liabilities, employees, warranties, restrictions, confidentiality and general terms, with signature sections and schedules listing the assets, the payment terms and the warranties. Here is an extract from a sample agreement we generated:

2. Sale and purchase

2.2 The Excluded Assets are not included in the sale. This agreement transfers only the Assets and does not transfer any other part of the Seller’s business, any Transferring Contracts or any Assumed Liabilities.

2.3 Title to and risk in the Assets shall pass to the Buyer at Completion, notwithstanding that part of the Price remains payable by instalments after Completion.

2.4 Between the date of this agreement and Completion, the Seller shall: (a) keep the Assets safe and in their present condition; (b) not sell, charge or otherwise dispose of any of the Assets; and (c) notify the Buyer at once of any loss of or damage to any of the Assets.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the assets, price, completion and what transfers to the buyer.
2. Generate your agreement
   We draft a clear, balanced agreement from your answers.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your agreement within 24 hours and makes amendments where needed. The Essentials plan does not include this check. See how our documents are verified.
4. Sign and complete
   Download it, sign it with the other party and complete the sale.

How It Works in Different Countries

• UK
  When a business transfers, its employees usually transfer automatically to the buyer under TUPE, with information and consultation duties. The sale of a business as a going concern can be outside the scope of VAT if the conditions are met.
• United States
  Assets are usually transferred by a bill of sale and an assignment and assumption agreement. Employees do not transfer automatically, and some states have bulk sales or sales tax rules that apply to the sale of business assets.

These notes are general. Check the current rules where the assets and business are.

Asset Purchase Agreement FAQs

What is the difference between an asset purchase and a share purchase?

In an asset purchase, the buyer buys chosen assets from the company. In a share purchase, the buyer buys the company itself, with all its assets and liabilities.

Does the buyer take on the seller's debts?

Only those the agreement says the buyer takes on. Other liabilities stay with the seller.

What warranties does the seller give?

That depends on your choice. Your agreement includes either standard warranties about title, charges and the description of the assets, or title warranties only, with the assets otherwise sold as seen.

Can the price be paid in instalments?

Yes. Your agreement sets out the instalments, and lets the seller call in the balance if a payment is not made on time.

Can I use this agreement outside the UK?

Yes. Your agreement is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and, on the Verified plan, check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your agreement is governed by another country's law, we recommend having a local lawyer check it too.

Create an Asset Purchase Agreement

Buy or sell business assets with clear, balanced terms. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Share Purchase Agreement, Purchase of Business Agreement, Stock Purchase Agreement and Sales Agreement.