Asset Purchase Agreement Basics

Summary

This practice note provides an overview of considerations for an M&A practitioner when drafting or negotiating an asset purchase agreement. Click here to see recent examples of publicly filed asset purchase agreements in Market Standards. An asset purchase agreement is the operative agreement governing an asset purchase transaction. The agreement includes a description of the assets being sold and any liabilities being assumed; the mechanics of transferring the assets; the purchase price; and the parties' pre- and post-closing obligations. In order to address business and risk allocation issues, the purchase agreement also includes representations and warranties, covenants, indemnification, and termination provisions. Exhibits to an asset purchase agreement frequently include the bill of sale for the assets and other instruments of transfer, assignment and assumption agreements, and other ancillary documents necessary to consummate the transaction.