8 Important Things to Look for in an Asset Purchase Agreement

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 4,123 reviews

Jump to Section

Need help with an Asset Purchase Agreement?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

An asset purchase agreement is a legal contract that outlines the terms of an agreement to transfer assets between parties. Selling assets is a serious endeavor that benefits from a legal agreement like an asset purchase agreement, primarily when liquidating assets, working through an estate asset sale, or closing a business partnership.

An asset purchase could include:

  • A land deal or real estate investment
  • Collectibles like art or jewelry
  • Intellectual property such as a trademark, copyright, and patent
  • An entire business like a corporation, businesses that have entered into a joint venture agreement, or an LLC
  • Heavy equipment like cars, airplanes, or machinery

An asset purchase agreement is usually prefaced by a letter of intent, or bid letter, that formalizes the offer to a potential seller by presenting terms to enter into a transaction.

As with any legal document, it is best to seek the advice of a lawyer before agreeing. However, it never hurts to be prepared. With that in mind, let’s dig a little deeper into the 8 important things you should look for in an asset purchase agreement.

1. Purchase Price & Payment

First and foremost, you want to identify the purchase price and how the payment will be structured. Asset purchase agreements generally are for significant business assets, not small items.

In this section of the agreement, the amount paid for the acquired assets is broken down, and it also includes details about how and when the purchase happens.

2. Assets Being Purchased

Even though this seems like an obvious point, you should detail all assets being purchased in this section. For instance, in a land purchase, you would need to define how large the lot is and any other items included or excluded from the deal, like buildings or parking spaces and the like.

In a former partnership agreement, you would need to list all the business equipment being transferred, down to the last chair, while service businesses being purchased as an asset would include the nature of services offered and specifics about any limitations to service.

Meet some lawyers on our platform

Jonathan M.

1 project on CC
View Profile

Michael M.

183 projects on CC
View Profile

Kelvin R.

11 projects on CC
View Profile

Benjamin E.

46 projects on CC
View Profile

3. Transfer of Assets

Another key item to include in an asset purchase agreement is a description of the transfer of assets. This could include anything the seller is selling or acquired assets and any assumed liabilities.

Typically, the total assets in a business are considered acquired assets, but that does not necessarily hold for all liabilities.

This brings to the forefront another portion that should be included in this section, namely which liabilities remain with the seller and which transfer to the buyer. As such an important litigation point, this is one of those items where the advice of a professional lawyer would be advisable.

4. Closing Terms

One of the more important parts of an asset purchase agreement is the closing terms. This is when the parties formalize the purchase. This section also lists the documents that should be brought to the closing meeting. These documents include:

  • Corporate resolutions showing that the seller has authority to enter into the transaction
  • Employment contracts for key employees
  • An executed noncompete agreement
  • Certificates of good standing

For the most part, when the agreement is signed, the deal is considered closed, but that is not always the case.

5. Post-Sale Obligations

In some cases, there are post-sale obligates after the closing. For example, some agreements include Conditions to Closing or certain things that must happen for the transaction to be considered complete.

For example, post-sale obligations for the sale of a franchise may include the stipulation that the franchisor must consent to the transaction. This is common in a sign-then-close deal where the closing meeting and signature of the asset purchase agreement do not mean the deal is final.

6. Warranties

Warranties are the promises the parties make to each other by signing the agreement. They are legal representations that are associated with the purchase, so if they are later found to be unfounded, it would be grounds for legal action.

7. Covenants

The covenant section of an asset purchase agreement is one of the most diverse sections. Covenants are side agreements that can be made under the umbrella of the asset purchase agreement.

An example of a covenant could be a non-compete with the buyer for a certain period or in a defined geographic location. On the other side, the seller could agree to consult during an agreed-upon time of transition.

8. Indemnification

The indemnification section is the protection section for both buyer and seller. Indemnification outlines the damages awarded to the prevailing party of any legal dispute arising from the agreement. This could include attorneys’ fees and court costs.

When considering the asset purchase agreement cost, you should not just consider costs associated with creating the agreement. You must also consider what could be lost if you use an inexperienced lawyer.

Post a project in ContractsCounsel’s marketplace to receive flat fee bids from lawyers for your project. All lawyers have been vetted by our team and peer-reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Michael W. on ContractsCounsel
View Michael
5.0 (2)
Member Since:
July 13, 2020

Michael W.

Attorney
Free Consultation
Columbia, MD
12 Yrs Experience
Licensed in MD
Georgetown University Law Center

Graduate of Georgetown Law (J.D. and LL.M in Taxation) Injury Claims Adjuster before law school for top insurer Eight plus years of legal experience Past roles: Associate at premier boutique law firm in the DC metro area Policy Associate at a large academic and research institution Solo Practice Areas of Expertise: Contracts Business Formation Trusts and Estates Demand Letters Entertainment Transactions

Mark D. on ContractsCounsel
View Mark
5.0 (9)
Member Since:
August 27, 2020

Mark D.

Attorney
Free Consultation
San Diego, CA
13 Yrs Experience
Licensed in CA
Boston College Law School

California-based small business attorney handling matters related to securities, mergers & acquisitions, corporate governance, and other business transactions.

Agnes M. on ContractsCounsel
View Agnes
5.0 (6)
Member Since:
July 13, 2020

Agnes M.

Managing Attorney
Free Consultation
Florida
13 Yrs Experience
Licensed in FL, NJ, PA
Florida Coastal School of Law

Agnes Mombrun Geter is the Founder and Managing Attorney of Mombrun Law, PLLC. She is an experienced attorney and is a member of the Florida Bar, New Jersey Bar, and the Pennsylvania Bar. The firm's practice focuses on Estate Planning, Business Law, and Debt Settlement including IRS Debt Relief. The firm's goal is to simplify the law and provide clients with the confidence and information necessary to make their decisions. The firm also provides project-based legal services to other attorneys and law firms, along with assisting as personal counsel and local counsel on legal matters.

Julian H. on ContractsCounsel
View Julian
5.0 (1)
Member Since:
July 14, 2020

Julian H.

Business Attorney
Free Consultation
Washington, DC
21 Yrs Experience
Licensed in MD
Howard University School of Law

I am a business attorney with years of experience advising individual entrepreneurs and small businesses on issues ranging from entity selection/formation to employment law compliance, to intellectual property protection and exploitation. I often act as General Counsel for my clients fulfilling the legal function as part of a team of managers. I look forward to learning more about your business and how I may be of assistance.

Richard N. on ContractsCounsel
View Richard
4.9 (42)
Member Since:
July 9, 2020

Richard N.

Managing Member
Free Consultation
Princeton, NJ
40 Yrs Experience
Licensed in NJ
New York Law School

I have been practicing law for 35 years. In addition to my law degree, I hold an MBA. I've created six companies, currently act as outside counsel to another 12, and have been an advisor to more than 500 startups and entrepreneurs.

Donya G. on ContractsCounsel
View Donya
4.9 (40)
Member Since:
July 11, 2020

Donya G.

Contract, E-Commerce Attorney & Dispute Resolution Specialists
Free Consultation
United States
23 Yrs Experience
Licensed in CT, NY
Pace University School of Law

I am a licensed and active NY Contracts Attorney, with over 20 years of diverse legal and business experience. I specialize in reviewing, drafting and negotiating commercial agreements. My practice focuses on working with small business clients as well as clients from international brokerage firms on acquisitions, especially in the Ecommerce space; drafting, negotiating, reviewing and advising on business agreements; ; breach of contract issues, contract disputes and arbitration. I am licensed to practice in New York and Connecticut, and am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. This entails reviewing, updating and drafting contracts such as employments agreements, asset purchase agreements, master services agreements, operating agreements and a variety of business and commercial contracts. Additionally, I assist clients with business strategies, contract disputes and arbitration. My diverse experience allows me to give my clients a well-rounded approach to the issues they face. I have been at top AML law firms; a Vice President at an Investment Bank, a Civil Court Arbitrator presiding over cases in contract law, commercial law, a Hearing Officer, presiding over cases and rendering written decisions, and a Judicial Clerk to a Civil Court Judge. It would be a privilege to assist you and your business with my services.

Carlos C. on ContractsCounsel
View Carlos
Member Since:
July 11, 2020

Carlos C.

Attorney-at-law and Certified Public Accountant
Free Consultation
Atlanta, GA
27 Yrs Experience
Licensed in DC, FL, GA
Inter American University

Carlos Colón-Machargo is a fully bilingual (English-Spanish) attorney-at-law and Certified Public Accountant (CPA) with over twenty years of experience. His major areas of practice include labor and employment law; business law; corporate, contract and tax law; and estate planning. He is currently admitted to practice law in Georgia, Florida, the District of Columbia and Puerto Rico and currently licensed as a CPA in Florida. He received a Master of Laws from the Georgetown University Law Center in 1997, where he concentrated in Labor and Employment Law (LL. M. in Labor and Employment Law) and a Juris Doctor, cum laude, from the Inter American University.

Matthew F. on ContractsCounsel
View Matthew
Member Since:
July 13, 2020

Matthew F.

Attorney
Free Consultation
Coral Springs, FL
20 Yrs Experience
Licensed in FL
UF Levin College of Law

As a business law attorney serving Coral Springs, Parkland, and Broward County, FL, Matthew has been recognized as “AV” rated, which is the highest rating an attorney can achieve through Martindale’s Peer Review system. Year after year Matthew is listed in the “Legal Leaders” publication as a top-rated attorney in South Florida in the areas of litigation, commercial litigation, and real estate. Matthew is also a graduate and instructor of the Kaufman Foundation’s FastTrac NewVenture Program, presented by the Broward County Office of Economic and Small Business Development.

John B. on ContractsCounsel
View John
Member Since:
July 13, 2020

John B.

Managing Partner
Free Consultation
New York, NY
8 Yrs Experience
Licensed in NJ, NY
New York Law School

John Benemerito is the Founder and Managing Partner of Benemerito Attorneys at Law. Admitted to practice in New York and New Jersey, John represents small business owners and startups in the areas of Business and Securities Law. John received his Bachelors Degree at John Jay College of Criminal Justice where he majored in Criminal Justice. Afterwards, he attended New York Law School where he focused his studies on Corporate and Securities Law. John comes from a family of entrepreneurs. From as far back as he can remember he was always involved in his family’s numerous businesses. At the age of fifteen, John entered into a new business venture with his father and managed to grow and maintain that business through high school, college and law school.John is currently a co founder in over five different businesses. After law school, John decided that he wanted to help people like himself. He opened his own law practice and began working primarily with small business owners until he was introduced into the startup world. Ever since that time, John has worked with hundreds of startups and thousands of entrepreneurs from all different backgrounds in helping them achieve their goals. Having been an entrepreneur his entire life, John understands what it takes to create and maintain a successful business. He enjoys sitting down and working with his clients in figuring out each of their unique challenges.

Dillon N. on ContractsCounsel
View Dillon
Member Since:
July 13, 2020

Dillon N.

Associate Attorney
Free Consultation
Chicago, IL
8 Yrs Experience
Licensed in IL, KY
University of Kentucky College of Law

I joined Enterprise Law Group, LLP as an Associate in March 2020. My practice has involved a wide range of legal matters from commercial real estate, finance and international business transactions to litigation matters including commercial disputes, personal injury and medical malpractice. Proficient in Spanish, I graduated from the University of Kentucky College of Law, the Patterson School of Diplomacy and International Commerce, and the University of Southern California. Prior to my legal career, I sought diverse professional experiences. After graduating from college, I orchestrated my own volunteering experience in southern Peru with a small non-profit organization. Later I gained valuable professional experience as part of a U.S. Senate campaign, and after that I joined the public policy team at Greater Louisville, Inc., Louisville's Chamber of Commerce affiliate. Prior to law school, I embarked on a month long excursion with the Northern Outdoor Leadership School in Alaska, which gave me a new found appreciation for sustainability.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call