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An asset purchase agreement, also known as an asset sale agreement, business purchase agreement, or APA, is a written legal instrument that formalizes the purchase of a business or significant business asset. It details the structure of the deal, price, limitations, and warranties.
Parts of an Asset Purchase AgreementRecitals. The opening paragraph of an asset purchase agreement includes the buyer and seller's name and address as well as the date of signing.Definitions.Purchase Price and Allocation.Closing Terms.Warranties.Covenants.Indemnification.Governance.More items...
Where a transaction is structured as an asset sale, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) may operate to transfer the employees from the seller to the buyer.
The employees who are employed by the target entity will generally come with the transaction, like a stock purchase. If certain employees at the seller/parent company provide significant services to the target entity, then the transaction will act like an asset purchase with respect to this group of employees.
In an asset sale, you retain the legal entity of the business and only sell the business' assets. For example, say you run a rental car company owned by Harry Smith Pty Ltd. You decide that you need to sell 50% of your fleet to upgrade your vehicles and want to sell those vehicles in one transaction to one buyer.
You can negotiate the conditions in a sale and purchase agreement. A sale and purchase agreement becomes unconditional when all the conditions are met. The agent helps you and the seller to include the conditions you both want.
At the closing of an asset purchase, employees of the seller are generally terminated as employees of the seller, and after closing, those employees are rehired by the purchaser.
An asset purchase agreement (also known as a 'business purchase agreement' or 'APA') is an agreement setting out the terms and conditions relating to the sale and purchase of assets in a company.
In an asset acquisition, the buyer is able to specify the liabilities it is willing to assume, while leaving other liabilities behind. In a stock purchase, on the other hand, the buyer purchases stock in a company that may have unknown or uncertain liabilities.
An asset purchase agreement (APA) is a definitive agreement that finalizes all terms and conditions related to the purchase and sale of a company's assets. It is different from a stock purchase agreement (SPA) where company shares, including title to the assets and liabilities, are being bought/sold.