Asset Purchase Agreement
(Pro-Seller) (DE)

Summary

This is a template Asset Purchase Agreement for use in the private acquisition of all or substantially all of a seller's assets by a buyer for cash, governed by Delaware law, drafted in favor of seller. This template includes practical guidance, drafting notes, alternate and optional clauses. Click here to see recent examples of publicly filed asset purchase agreements in Market Standards—M&A. Market Standards enables users to search, compare, and analyze its comprehensive database of transactions using over 150 detailed data points to filter search results. You can customize any search to your needs by adding filters or modifying the search criteria. Asset Acquisition Structure An asset purchase agreement is the operative agreement in asset purchase transactions. In a standard asset purchase transaction, a buyer purchases certain specific assets and assumes specific liabilities from a seller. Unlike a stock purchase, a buyer does not purchase the shares of the company from its stockholders. As a result, the ownership of the company does not change at the end of the transaction. Also, unlike a merger, no parties or subsidiaries merge and, as a result, each party to an asset purchase will maintain its separate legal existence after consummation of the transaction. Furthermore, buyers in an asset purchase transaction do not succeed to all of a seller's assets and liabilities by operation of law, as occurs in a merger. Rather, the parties must agree on which assets will be sold, which liabilities will be assumed, and which assets and liabilities will remain with seller. Structuring an acquisition as an asset purchase has benefits and drawbacks. • Asset purchases are often the most tax favorable to buyers and the least tax favorable to sellers unless a seller is a pass-through entity such as an LLC or an S corporation. • One of the benefits of an asset deal is that, subject to doctrines on successor liability, a buyer is selecting liabilities to be transferred to a buyer and thus, in theory, is not assuming unknown liabilities. • Less commonly, the rationale for an asset deal may depend on the jurisdiction; in some states that do not allow for cross-species mergers, or where the cross-species merger is difficult or expensive, the asset purchase may reasonably be the only available structure to acquire assets. For additional information on the benefits and drawbacks of an asset purchase agreement, see Asset Purchase, Stock Purchase, and Merger Structures: Benefits and Drawbacks. Asset purchase agreements are often the most complex of the three main acquisition structures, principally because the assets to be purchased, and the liabilities to be transferred to the buyer, have to be identified with reasonable certainty so that the parties know what is being sold and purchased. Sellers in an asset deal must transfer intellectual property assets, assign individual contracts to a buyer, transfer licenses and government authorizations to a new entity, and deal with the remaining assets and liabilities. These requirements often result in extensive disclosure schedules and lengthy due diligence. For an annotated disclosure schedule template, see Disclosure Schedule to Asset Purchase Agreement. Asset Purchase Agreement Provisions This template makes the following assumptions regarding the transaction and the parties: • The buyer will be purchasing all, or substantially all, of the assets of the seller • The transaction will be structured with a separate signing and closing (a "sign-then-close" transaction) • The target company is not a reporting company under the Securities Act of 1933, as amended, and does not have subsidiaries • The purchase price will be paid in cash • The parties will file premerger notifications under the Hart-Scott-Rodino Antitrust Improvement Acts of 1976 • The transaction will not require notice to or review by the Committee on Foreign Investment in the United States (CFIUS) • The target company does not operate in a traditionally highly regulated industry (e.g., energy, telecommunications, insurance, defense) • The transaction will not involve the use of representations and warranties insurance (RWI) Asset purchase agreements must be tailored to the assets involved and the circumstances of the sale, in particular, the business in which the assets are used. For example, the buyer of real property will demand specific representations and document deliverables at closing. Parties in the sale of technology assets must account for intellectual property (IP) representations and negotiate the transfer, licensing, or other treatment of IP rights. This template also assumes a widely-held, private seller that will continue existence post-closing (thereby being available for indemnification and other purposes). In a situation in which the seller contemplates dissolution after the closing or immediate distribution of the proceeds of the sale to its stockholders, the buyer may wish to include such stockholders as parties to this agreement for the purposes of indemnification. To the extent feasible, these points are discussed in drafting notes to alert the drafter of the need for particularity. Pro-seller Considerations It is customary for buyer's counsel to draft and provide the initial draft of the acquisition agreement. However, there are instances where seller's counsel may desire to provide the initial draft. First, the seller may have the bargaining power or sufficient leverage to serve up the initial draft. In such cases, the parties should agree to such delegation in a preliminary agreement (letter of intent, term sheet, etc.) or discussion. Seller's counsel should follow the preliminary agreement in the initial draft, but with the understanding that the draft will be slanted in favor of the seller. Second, seller's counsel typically prepares the initial draft of an acquisition agreement when the acquisition involves an auction among competing prospective bidders. The initial draft may be aggressively pro-seller, with the expectation that prospective bidder will add more robust provisions based on their bid package and risk appetite. Ultimately, each of the parties will need to carefully assess whether to take an aggressive drafting approach versus a more marketable or balanced approach to efficiently negotiate and finalize the acquisition agreement. In comparison to Asset Purchase Agreement (Pro-Buyer) (DE), this agreement makes, among other revisions, the following pro-seller changes: • Removal of an earn-out provision • Reduction of total seller representations and warranties, as well as addition of qualifiers and narrowing language to reduce their scope • Inclusion of buyer financing representations and warranties • The definitions of "Material Adverse Effect," "Losses," and "Knowledge" are more seller-favorable • There are fewer seller covenants between signing and closing • No non-compete or non-solicit obligations for seller post-closing and no exclusivity prior to closing • Efforts to close and regulatory approvals revised to be seller-friendly (including requiring buyer divestment if necessary) • Indemnification significantly revised to include mini-basket, true deductible, liability cap, and a suite of other limitations such as mitigation, insurance offset, and anti-sandbagging provisions Industry-specific Considerations An acquisition agreement should be tailored to the specific industry in which a business operates, especially if the industry is highly regulated. This means adding provisions to address: • Representations and warranties regarding compliance with industry-specific laws, maintenance and enforceability of third-party contracts, licenses, and permits, or any third-party approvals for a change of control, and absence of litigation, court orders, defaults, or violations affecting the business • Interim covenants relating to any state, federal, or local regulatory approvals, licenses, and permits necessary to operate the business after closing and effectiveness of the merger • Special indemnities related to known liabilities, especially for regulatory matters • Termination rights specific to the applicable regulatory scheme –and– • Outside date extension rights in the event any regulatory or other third-party delay or action prevents the parties from closing the transaction on or before the outside date The regulatory schemes that are addressed in this template are those that are generally applicable without regard to industry, such as antitrust, tax, ERISA, environmental, anticorruption, and federal securities regulation. This template, including the particular assets to be acquired, will likely need to be tailored to suit the particular circumstances of a transaction. You should be sure to involve and consult appropriate legal specialists in non-corporate areas of review (e.g., tax, intellectual property, real estate, environmental, etc.) when preparing, reviewing, and negotiating an asset purchase agreement. Related Content Resource Kits • Corporate and M&A Templates Integrated with Market Data Resource Kit Practice Notes • Asset Purchase Agreement Basics • Asset Acquisition Resource Kit • M&A Provisions Resource Kit • Asset Purchase, Stock Purchase, and Merger Structures: Benefits and Drawbacks • Asset Purchase Transactions Training Presentation • Asset Transaction Key Considerations Video Templates • Asset Purchase Agreement (Pro-Buyer) (DE) • Asset Purchase Agreement (Pro-Buyer) (Short Form) (DE) • Asset Purchase Agreement (Pro-Seller) (Short Form) (DE) Checklists • Asset Purchase Agreement Drafting Checklist • Acquisition Agreements Key Covenants Chart • Closing Conditions Drafting Considerations Chart • Key Drafting Considerations for Indemnification Provisions (Chart) • Key Representations and Warranties in Acquisition Agreements (Chart) • Private Acquisition Agreements Key Negotiating Points Checklist • Termination Provisions and Fees Checklist Click here to see recent examples of publicly filed asset purchase agreements in Market Standards—M&A, the searchable database of publicly filed M&A deals from Practical Guidance that enables users to search, compare, and analyze its comprehensive database of transactions using over 150 detailed data points to filter search results. You can customize any search to your needs by adding filters or modifying the search criteria. To compare selected state laws on asset sales and appraisal rights, see the Corporate and M&A section of the State Law Comparison Tool. 2025 SRS Acquiom M&A Deal Terms Study Deal data and graphics from the 2025 SRS Acquiom M&A Deal Terms Study are incorporated into certain drafting notes in this template. That study analyzes more than 2,200 private-target acquisitions ($505 billion) that closed from 2019 through 2024, the vast majority of which are not publicly reported. SRS Acquiom provided professional and financial services on those deals. Click here to access the complete 2025 SRS Acquiom M&A Deal Terms Study.