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The following points should be included in an asset transfer agreement: Details of the companies involved. The details of the assets that are being transferred. The ?whereas? clause. Warranties and other legal terms and conditions. Undertaking and obligation clauses. Termination terms and conditions.

Under an asset sale, you purchase the seller's assets and liabilities, but the seller retains possession of the legal entity. Under a stock sale, you purchase the seller's stock - thereby taking possession of the seller's legal entity (in addition to their assets and liabilities).

In an asset purchase, the buyer will only buy certain assets of the seller's company. The seller will continue to own the assets that were not included in the purchase agreement with the buyer. The transfer of ownership of certain assets may need to be confirmed with filings, such as titles to transfer real estate.

Asset Purchase vs Stock Purchase: Asset Disadvantages The tax cost to the seller is typically higher, so the seller may insist on receiving a higher purchase price. Assignable contract rights may be limited. Assets may need to be retitled. Employment agreements with key employees may need to be renegotiated.

Once an asset purchase is complete, the assets and liabilities that have been purchased are moved to the new entity and the old entity (and any assets or liabilities it still owns) must be wound down. In a stock purchase, the buyer purchases the entire company, including all assets and liabilities.

What is included in your contract will differ based on your circumstances, but a starting agreement should include: Party information. ... Definitions. ... Purchased assets. ... Purchase price. ... Additional covenants. ... Warranties or disclaimers. ... Indemnification. ... Breach of contract provisions.

Well, the buyer might be able to have it both ways. A corporation can make an election to treat a qualifying stock purchase as an asset purchase for federal income tax purposes.

Key Components of a Comprehensive Business Transfer Agreement Parties Involved. ... Assets and Liabilities. ... Purchase Price and Payment Terms. ... Conditions Precedent. ... Representations and Warranties. ... Indemnification. ... Confidentiality. ... Non-Compete and Non-Solicitation.