If you are planning to make a deal where you sell or purchase assets, it’s always important to protect yourself legally with an asset purchase agreement template.
An asset purchase agreement, sometimes called APA or a business purchase agreement, is a legal document that is used to enter into a formal agreement to buy or sell certain assets.
Asset purchase agreements are typically used to purchase an entire business or part of a business. This type of agreement can also be used for the purchase of business assets, such as intellectual property or equipment. It explains the structure of that business purchase, the price, any limitations associated with the deal, and warranties.
What is included in an asset purchase contract will vary depending on what is being purchased or sold. However, the agreement should typically include the fair market value of whatever assets are being sold or purchased, the timeline for the deal, whether money has to be put into an escrow or made on deposit, any warranties or guarantees associated with the purchase, prohibited activities, termination clauses, and so on.
If you are purchasing part of a business, some of the key warranties or guarantees you might write into your asset purchase contract include an evaluation of any outstanding liabilities and a guarantee that there isn’t anything in the company’s past that leaves you as the new owner open to potential lawsuits down the line.
It is always easier to download a printable form of asset purchase agreement document online where assets and liabilities are concerned. An asset purchase agreement form can be edited as a PDF or word document and customized to each unique situation. This might include adding information regarding:
It’s important to follow the following steps to ensure a valid and comprehensive asset purchase contract is executed:
Start by getting a copy of an asset purchase agreement template. A template will make things much easier to follow and ensure that you cover all of your legal basis.
You need to record the date. The date associated with the agreement indicates at what point the asset purchase goes into effect.
This step involves naming the buyer who is requesting the sale, the person who wants to purchase the asset from you. You should not only include their name but their contact information and address.
Next, you need to identify the person who is selling the assets, listing them by name and address as well. If it is being sold by a company, you can list the company name and address instead.
Because assets come in many forms, you need to specify whether the purchase is for something tangible.
If there is any type of intangible asset, something you can’t physically hold, included in the agreement, you are still required to report it for tax purposes.
The next step is to establish the purchase price for the assets. If more than one asset is being sold under the same asset agreement, list them individually with their respective purchase prices. This is where your payment terms are explained in detail.
In some situations, a deposit is required. If the seller wants a security deposit, that has to be written into the next part of the agreement and signed by both parties.
Assets of high enough value typically need an inspection, part of due diligence. The purchaser might require an inspection just the same as the seller might require a deposit. In these cases, you need to address whether an inspection is required, and if so, who pays for it.
Next, set up the provisions for payment. This is where you establish how the payment will be made. If, for example, a payment is to be deposited into the seller’s bank account, the bank account number needs to be listed in this section and include the date by which the payment must be made. Also include assumed liabilities or other obligations associated with the purchase and sale of certain assets.
If there is some sort of financing status involved in the sale, this has to be addressed in this next section. In certain cases, large assets might be contingent on the sale of another asset. For example, if someone is selling their home and moving to a new state, they might purchase a specific asset in that new state contingent upon the sale of their home. This provides a little bit of legal leeway on the off chance that the sale of their home falls through and there is not enough money for the asset purchase.
List all of the third parties who have to approve the purchase. There are several situations where an asset purchase agreement can’t go through unless other business owners or members of the family give their approval.
Add the date and the cost for closing. This might include the closing date, disclosure schedules, and what happens if these dates and costs are not covered.
Next, you need to review any conditions associated with the sale. Because an APA contract can apply to things like a stock purchase or intellectual property purchase, there may be varying conditions to the sale. Someone who wants to purchase intellectual property might need approval from the entire company and give assurance that they will not use the intellectual property in certain countries or with a certain language.
With an APAagreement, you might need to guarantee the quality of the purchased assets as part of the asset deal.
It’s always a good idea to include mediation and arbitration terms as a precaution. Mediation and arbitration are usually laid out as a way to resolve legal disputes involving your APA purchase agreement outside of court. Negotiations remain private as well. This can be a very good option if you are purchasing assets for your business or from a business that you don’t yet want to be made public.
Explain the location where this APA contract exists, namely the state in which you are both signing.
Finally, you need to display the seller’s authorization, evidencing their right and authority for the transaction.
You also need to provide approval for the deal, a section where you confirm the fair market value or the purchase price of specific assets as outlined in the legal documents.
When you use this asset purchase agreement PDF, you assume all responsibility and liability. No legal responsibility is retained by Lawrina for the legal document’s accuracy, reliability, or functionality.
The unprofessional use of this legal form or other templates on this website could result in direct or indirect losses or damages. By downloading, printing, or using this agreement, you accept all liability for any loss or damage you may suffer.
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