Asset Purchase Agreement

This asset purchase agreement can be used for purchasing any form of business. However, it will need to be tailored slightly to identify the business and assets being bought.

Under the terms of this asset purchase agreement, the sale and purchase of the business will take place on the date that the parties sign and date the asset purchase agreement. On that date (the completion date), the sellers will transfer legal title in the business and assets to the buyer. In turn, the buyer will deliver the purchase price to the seller.

The agreement identifies the business and assets being acquired by the buyer as well as those assets and liabilities that are specifically excluded from the sale. Details of these assets and liabilities will need to be clearly set out in the agreement.

In connection with the sale and purchase of the business, the seller and where the seller is a company, its key shareholders (together the “warrantors”) will give certain warranties (legal assurances) to the buyer in relation to the business and its affairs. If the warranties are incorrect in any way and, as a result, it materialises that the business acquired by the buyer is in fact worth less than the amount he paid for the business, the buyer will be able to take a legal claim against the warrantors for breaching the warranties. This claim is called a warranty claim.

While this asset purchase agreement contains a number of standard warranties that a purchaser of a business might expect to see in an agreement of this kind, every business is different and, depending on the nature of the business, you may want to get specific warranties in relation to specific matters.

For example, if you are purchasing an IT business, you should be primarily focused on getting warranties in relation to its IT operations as opposed to warranties in relation to its environmental impact. By contrast, if you are purchasing a business that operates petrol stations, you will be more interested in environmental issues than IT issues.

If you require any additional warranties, you should refer to the long form warranties which are contained on this website. These long form warranties contain a variety of different warranties suitable for most any business.

There are certain limitations that apply to the taking of warranty claims – as more specifically described in the notes which accompany this asset purchase agreement. These limitations to warranty claims will not, however, apply where there is a defect in the seller’s title to the business or where the seller has acted in a fraudulent manner or in a manner which has delayed the taking of a warranty claim.

This asset purchase agreement also sets out the manner in which profits and losses of the business will be shared between the buyer and the seller post completion. For example, the seller normally retains all profits and losses incurred up to the date of signing the asset purchase agreement (called the completion date) whereas all profits and losses that occur post completion become the responsibility of the buyer.

Under English law, where a business is sold, the employees of that business are often transferred to the new owner of the business under the Protection of Employees’ Rights on Transfer of Undertakings Regulations (commonly referred to as the “TUPE regulations”). This asset purchase agreement sets out the basis on which those employees will transfer to the purchaser and, in particular, states that the seller remains responsible for any sums owed to or which may become owing to the employees arising out of matters which occurred prior to the completion of the sale and purchase of the business.

The agreement also provides for the proper transfer of all contracts and agreements relating to the business to the purchaser; such transfers to happen on completion of the sale and purchase of the business (usually). It also contains non-compete, non-solicitation (customers and employees) and non-interference provisions which apply to the seller of the business post completion.

The asset purchase agreement also includes standard boiler plate clauses such as in relation to confidentiality, notice requirements, governing laws, etc.

Detailed instructions on each of the clauses in this asset purchase agreement and on completing the asset purchase agreement are contained in the notes that accompany the agreement. The asset purchase agreement comes in downloadable format.

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