If you’re undertaking a corporate merger or a business acquisition, you will need an asset purchase agreement to ensure this process is executed properly. These documents can become complicated, especially as certain assets could require title changes. A business law attorney from Bowles & Verna can help.
The team at our Walnut Creek, CA law firm would like to consider some of the basics when it comes to asset purchase agreements and what they mean for your business. We can go over matters in greater detail during an in-person legal consultation.
Asset Purchase Agreements: The Basics
In simple terms, an asset purchase agreement is a type of agreement that outlines all of the terms and conditions related to the sale of a company’s assets. It’s essential when a person is selling the assets of a business or when someone is purchasing the assets of said business. When buying a company, not all assets will always be transferred, and it’s common for certain assets to be excluded in a sale. Only the assets purchased will change ownership, not necessarily the whole business as a legal entity or the various liabilities of said business.
While the buyer receives the agreed upon assets, the seller can still maintain various assets and liabilities as well as any obligations entailed with ownership.
What Is Included in an Asset Purchase Agreement?
Asset purchase agreements typically include information on the purchase price, monthly payments on the purchase, any liens on the assets, and so forth. If you work with our Walnut Creek law firm, we can go over what specifics should be included in your asset purchase agreement.
Difference from a Stock Purchase Agreement
Asset purchase agreements do not cover the sale of stock, nor titles to a company’s assets or liabilities. In these cases, a stock purchase agreement (or equity purchase agreement) is required. In a stock purchase agreement or a merger agreement, a buyer could receive all of a seller’s assets as well as all of the seller’s liabilities.
An asset purchase agreement, by contrast, allows the buyer and seller to negotiate which assets as well as which liabilities are acquired during the merger/acquisition process. This is excellent for buyers who do not want to accept specific liabilities as well as liabilities that have not be disclosed or are not known.
How a Business Law Attorney Can Help
Corporate mergers and acquisitions can be extremely complicated, especially when dealing with different kinds of assets. Acquiring real estate could require a title change, for instance. Any contracts acquired through an asset purchase agreement may also require additional attention to the needs of numerous parties involved.
Given the complexity of acquisitions and change of control, it’s important to have skilled business lawyers on your side. They can help you understand what to expect as these assets change control, tax matters related to the merger or acquisition, and what to do in the event of disputes and unforeseen circumstances.
Speak with Our Lawyers
If you have questions or concerns about legal matters related to your business, be sure to contact our skilled team of business law attorneys. The lawyers at Bowles & Verna can be reached by phone in Walnut Creek at (925) 935-3300.