An asset purchase agreement is an agreement between a company selling its assets, whether substantially all of its assets or only some of its assets, and a buyer who desires to purchase the Seller’s assets. Asset purchase agreements are often complex and involve the buyer acquiring the assets, rights, and/or liabilities of the Seller as part of the purchase. It is important that the Seller’s rights to sell and/or assign any asset or liability are verified and subject to scrutiny through proper due diligence in these types of transactions.
Here are some common terms that buyers and sellers often fail to include or properly clarify when drafting an asset purchase agreement:
- The seller owes the assets free and clear of any liens or contracts which prohibit the sale or transfer of the asset.
- The parties fail to include terms for adjustments at closing for changes in the condition of the assets or inventory at the time of closing.
- The parties fail to run proper UCC and title searches on the assets or to see if there is any pending litigation between a party that may have an interest in the assets being sold such as a landlord.
- The parties fail to include detailed information as to the assets being transferred which often includes a failure to specifically identify specific social media accounts or other intellectual property being contemplated in the sale and/or which is required for the use.
- The parties fail to define default provisions or what happens in the event that a party breached a term or representation prior to closing. Such examples include, what happens if there is a lien on an asset or the seller does not possess the right to sell or transfer the asset. Does the buyer get his or her money back? Are they entitled to attorney fees and cost?
- The parties fail to define the process or timeline for seeking landlord approval of the buyer when taking over the location of the business is also contemplated as part of the sale.
- The parties fail to account for contingencies related to the transfer of licenses required to run the business and what happens if the license can not be transferred or the seller’s license is not in good standing.
In conclusion, regardless of whether you are the Seller or Buyer, it is strongly recommended that an attorney is hired to represent your interest from the beginning of the transaction. The drafting of an Asset Purchase Agreement requires an attorney which is experienced in drafting asset purchase agreements and handling such transactions.
Here at the Campbell Law Group, we have experience in drafting tailored Asset Purchase Agreements to meet your needs. We are a Miami area law firm that can handle transactions and draft agreements for businesses all over the state of Florida. So whether you are a small manufacturing concern in Jacksonville, an enterprise-level corporation in Tampa or a newly formed partnership in Boca Raton, you can access top-tier, affordable representation with a level of service and attention to detail that is simply second to none. For more information regarding how our firm can help you, please contact us.