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In an asset purchase transaction, the vendor is the company that owns the assets. The vendor sells some or all of its assets to the purchaser resulting in a transfer of such assets, including those desired contracts to which the company is a party to. Such transfer of the contracts will be done by way of an assignment.
It may happen that an assignor assigns the same interest twice (see Figure 14.2 "Successive Assignments"). With certain exceptions, the first assignee takes precedence over any subsequent assignee.
A basic, fairly typical anti-assignment clause is triggered by the type of assignment that is done in an asset purchase agreement. In other words, in an asset purchase deal, the buyer and seller often need the approval of third parties to the seller's commercial contracts.
Asset PurchasesSuch transfer of the contracts will be done by way of an assignment.
An asset purchase involves just the assets of a company. In either format, determining what is being acquired is critical. This article focuses on some of the important categories of assets to consider in a business purchase: real estate, personal property, and intellectual property.
Voting Rights and OwnershipUnlike an asset purchase, where the buyer simply buys the assets of the company, an equity purchaser actually buys the company itself, which can be beneficial if the company is performing well or has additional value as a going concern.
Conversely, stock purchases usually do not require the assignment of contracts, so third-party consents are not required unless the contracts contain change of control provisions. Further, stock purchases are often not subject to as many filing requirements that need to be satisfied by the parties (if any).
Any change in control of Party X resulting from a merger, consolidation, stock transfer or asset sale shall be deemed an assignment or transfer for purposes of this Agreement that requires Party Y's prior written consent.
In an asset sale the target's contracts are transferred to the buyer by means of assigning the contracts to the buyer. The default rule is generally that a party to a contract has the right to assign the agreement to a third party (although the assigning party remains liable to the counter-party under the agreement).
Assignment of contract is a clause often found in business contracts. A party may assign a contract to another party if the contract permits it and no law forbids it.