A guide to asset purchase agreements
A guide to asset purchase agreements

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • A guide to asset purchase agreements
  • Consideration
  • Completion
  • VAT
  • Warranties and indemnities
  • Transfers of employees and particular types of assets/liabilities
  • Restrictive covenants

This Practice note provides an overview of the agreement for the purchase of some or all of a company's assets (the APA).

See Precedent: Asset purchase agreement—long form—conditional (buyer's version).

The APA records the terms by which the buyer agrees to purchase from the seller the assets of the target business (the Assets) and is the key document in any asset purchase transaction. The buyer agrees to pay the seller the purchase price for the acquisition of the Assets (the Consideration) in return for which the seller transfers the title in the Assets by the appropriate mechanism (which will depend on the type of asset being transferred).

Certain assets can be transferred by delivery and the APA will be sufficient in itself to transfer such assets but other types of asset will require additional documentation to transfer them to the buyer. As only the assets that are specifically referred to in the APA will be transferred, care should be taken in defining these assets in the APA. The buyer will not acquire any assets (or liabilities) which are not set out in the APA.

The buyer will expect the Assets to be transferred with 'full title guarantee' by the seller. This means the seller is covenanting that it is transferring such Assets free from encumbrances and any third party claims. The allocation of risk for