Choose your asset purchase lawyer with confidence

What is an asset purchase agreement?

An asset purchase agreement details terms such as purchase price, conditions, and escrow terms. You can also include an inventory of the assets. In an asset purchase agreement, both buyer and seller agree to the specific terms.

As the buyer, your lawyer will generally prepare the first cut. It should describe exactly which assets are being bought, such as machinery, stock, customer/supplier contracts, premises and intellectual property. You’ll also list out the assets that are not being purchased. The buyer's lawyer normally prepares the asset purchase agreement because they will want to ensure that the terms of the asset purchase agreement protect your investment.

An asset purchase agreement covers the following sections:

• Interpretation: Gives definitions for all major terms used in the agreement
• Purchase and sale of stock: Lists the purchase price, any purchase price adjustments, purchase price allocation for tax purposes and dispute resolution mechanisms
• Representations and warranties of the seller and buyer: Provides all statements that the seller and buyer are signing off to be true
• Matters related to employees: Details how employee benefits and any accrued bonuses should be handled post transaction
• Indemnifications: Details indemnifications for any costs that may arise post transaction as a result of prior existing conditions
• Tax matters: Details special tax treatment entitles to the seller or buyer

What is included in an asset purchase agreement?

With an asset purchase, the buyer may be selecting only specific assets, leaving behind redundant assets. The basic difference between an asset purchase agreement and share purchase agreement is this itemisation of assets included and excluded in the purchase. (During a share purchase, such itemisation is not necessary as the company's ownership transfers as is, although there may still be terms in the SPA in relation to key assets.)

A standard asset purchase agreement will also generally cover:

• Stock
• Plant and Machinery
• Goodwill
• Creditors/debtors
• Employees
• Contracts
• Warranties
• Assignment deeds

Where business premises are involved in the purchase, you’ll also need:

• Transfer document
• Landlord consents
• Personal Guarantees
• Licence for early possession

Top tips when selecting a solicitor for your asset purchase agreement

Find an expert.

There are commercial solicitors that specialise in buying and selling businesses – take your time to ask them: “How many businesses have you helped your clients buy? How many were in the same or similar sectors as the one I’m looking at?” Be particularly vigilant if it’s an asset sale involving property. Drill down on their property expertise or how they’ll handle this component of the transaction if they themselves don’t have the expertise.

Get a fixed fee quote.

Any experienced solicitor who has completed enough business purchases can easily estimate a reasonable figure. They’ve seen it all. They know exactly what’s in and out of scope. And they’ll be able to clearly explain not only their own professional fees, but also any ‘disbursements’ such as government fees, taxes, search and filing fees that come with buying a business.

“The service has been totally user friendly. The world of the law can be daunting for those of us not in the know and Lexoo's approach has been relaxed and reassuring.”

- Peter Ford

Meet a Lexoo lawyer

Here’s a typical example of a client buying a business and looking for a commercial solicitor through Lexoo:

“I am buying a microbrewery and purchasing the equipment, stock, trading names and intellectual rights. We have agreed the purchase price and have a draft heads of terms. We need a solicitor to check these and the sale contract.”

John is a specialist business lawyer on Lexoo, who’d fit perfectly for this client.

A lawyer with over 20 years experience, and with previous posts at a top international law firm and as a director at a top 100 law firm, John is a Chartered Legal Executive and the Partner in charge of Commercial Property and Commercial matters at his firm.

He has extensive knowledge of the delivery of legal services across a broad range of Property and Commercial transactions.

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