Business Sale Asset Purchase Agreement

Business Sale Asset Purchase Agreement

Purpose of This Template

An Asset Purchase Agreement (APA) is used when a buyer acquires specified assets of a business rather than the ownership interests (stock/membership interests) of the business entity. This structure:

• Allows Selective Acquisition - Buyer chooses which assets to purchase and liabilities to assume
• Provides Liability Protection - Buyer generally does not assume undisclosed liabilities
• Offers Tax Benefits - Buyer receives "stepped-up" basis in acquired assets
• Requires More Documentation - Individual assets must be identified and transferred

Asset Purchase vs. Stock Purchase Comparison

Key Differences

When to Use Asset Purchase

☐ Buyer wants to select specific assets
☐ Target has known or potential liabilities
☐ Buyer wants stepped-up tax basis
☐ Target is C-corporation (despite seller preference)
☐ Target has unfavorable contracts buyer doesn't want
☐ Target is a sole proprietorship or partnership

Pre-Agreement Checklist

Due Diligence Completed

☐ Financial statement review
☐ Tax return review
☐ Asset verification and inspection
☐ Lien searches (UCC, judgment, tax)
☐ Contract review
☐ Employee/HR review
☐ Environmental assessment
☐ Intellectual property verification
☐ Customer/vendor analysis
☐ Litigation/claims review
☐ Insurance review
☐ Regulatory compliance review

Third-Party Consents Identified

☐ Landlord consent for lease assignment
☐ Customer consent (if required)
☐ Vendor consent (if required)
☐ Lender consent
☐ Franchisor consent (if franchise)
☐ Regulatory approvals
☐ Other: _________________________________

Professional Team Assembled

☐ Buyer's attorney
☐ Buyer's accountant
☐ Seller's attorney
☐ Seller's accountant
☐ Escrow agent
☐ Business valuation expert (if needed)

Asset Purchase Agreement

Parties

SELLER:
| Field | Information |
|-------|-------------|
| Legal Name | |
| Entity Type | ☐ Corporation ☐ LLC ☐ Partnership ☐ Sole Proprietorship |
| State of Formation | |
| Principal Address | |
| EIN | |

BUYER:
| Field | Information |
|-------|-------------|
| Legal Name | |
| Entity Type | ☐ Corporation ☐ LLC ☐ Partnership ☐ Individual |
| State of Formation | |
| Principal Address | |
| EIN | |

BUSINESS BEING ACQUIRED:
| Field | Information |
|-------|-------------|
| Business Name/DBA | |
| Business Address | |
| Type of Business | |

Article I: Purchase and Sale of Assets

Section 1.1 - Purchased Assets

Seller agrees to sell, and Buyer agrees to purchase, the following assets (collectively, "Purchased Assets"):

Tangible Personal Property:
☐ Furniture, fixtures, and equipment (Schedule 1.1(a))
☐ Inventory (Schedule 1.1(b))
☐ Vehicles (Schedule 1.1(c))
☐ Office equipment and supplies
☐ Signage
☐ Leasehold improvements
☐ Other tangible property: _________________________________

Intangible Assets:
☐ Goodwill
☐ Business name and DBA names
☐ Trademarks and service marks (Schedule 1.1(d))
☐ Patents and patent applications
☐ Copyrights
☐ Trade secrets
☐ Domain names and websites
☐ Social media accounts
☐ Customer lists
☐ Vendor lists
☐ Proprietary processes and know-how
☐ Software licenses (to extent transferable)
☐ Phone numbers and fax numbers
☐ Other intangible property: _________________________________

Contract Rights:
☐ Customer contracts (Schedule 1.1(e))
☐ Vendor/supplier contracts (Schedule 1.1(f))
☐ Equipment leases (Schedule 1.1(g))
☐ Service agreements
☐ Other contracts: _________________________________

Real Property Rights:
☐ Real property lease(s) (Schedule 1.1(h))
☐ Owned real property (separate deed)
☐ Leasehold improvements

Financial Assets:
☐ Accounts receivable (Schedule 1.1(i)): ☐ All ☐ Specified
☐ Security deposits
☐ Prepaid expenses
☐ Other: _________________________________

Other Assets:
☐ Licenses and permits (to extent transferable)
☐ Books and records
☐ Insurance policies (to extent transferable)
☐ Other: _________________________________

Section 1.2 - Excluded Assets

The following assets are NOT included in this sale:
☐ Cash and cash equivalents
☐ Bank accounts
☐ Accounts receivable: ☐ All ☐ Prior to: _____________
☐ Tax refunds
☐ Personal property of Seller's owners
☐ Corporate/entity records (minute books, stock records)
☐ Insurance policies (unless listed above)
☐ Contracts not listed in Schedules
☐ Employee benefit plan assets
☐ Intercompany accounts
☐ Real estate (unless listed above)
☐ Other: _________________________________

Article II: Assumed and Excluded Liabilities

Section 2.1 - Assumed Liabilities

Buyer agrees to assume ONLY the following liabilities:

☐ Obligations under Assigned Contracts arising AFTER Closing
☐ Trade accounts payable listed on Schedule 2.1: $_____________
☐ Accrued expenses listed on Schedule 2.1: $_____________
☐ Customer deposits: $_____________
☐ Gift cards and store credits: $_____________
☐ Warranty obligations (for products sold after Closing)
☐ Real property lease obligations (after Closing)
☐ Equipment lease obligations (after Closing)
☐ Other: _________________________________

TOTAL ASSUMED LIABILITIES: $_____________

Section 2.2 - Excluded Liabilities (Retained by Seller)

Seller retains ALL liabilities not expressly assumed, including:

☐ All liabilities arising before Closing Date
☐ Accounts payable not listed on Schedule 2.1
☐ Debt and bank loans
☐ Taxes (income, sales, payroll, etc.) through Closing
☐ Employee liabilities (wages, benefits, severance, WARN Act)
☐ Product liability for products sold before Closing
☐ Litigation and claims (pending or threatened)
☐ Environmental liabilities
☐ Breach of contract claims arising before Closing
☐ Liabilities under excluded contracts
☐ Liabilities to Seller's owners, affiliates, or related parties
☐ Any undisclosed liabilities
☐ Other: _________________________________

Article III: Purchase Price and Payment

Section 3.1 - Purchase Price

Section 3.2 - Purchase Price Allocation

The Purchase Price shall be allocated among the Purchased Assets as follows (in accordance with IRC Section 1060):

☐ Buyer and Seller agree to file consistent IRS Forms 8594
☐ Allocation may be adjusted based on final inventory count

Section 3.3 - Payment Terms

Section 3.4 - Seller Financing (if applicable)

☐ No seller financing
☐ Seller financing provided:

☐ Promissory Note attached as Exhibit A
☐ Security Agreement attached as Exhibit B

Section 3.5 - Escrow Holdback (if applicable)

☐ No escrow
☐ Escrow established:

• Amount: $_______________ (___% of Purchase Price)
• Escrow Agent: ___________________________________
• Purpose: Indemnification claims / Working capital adjustment / Other
• Release Schedule: ___________________________________
• Interest: Payable to ☐ Buyer ☐ Seller ☐ Split

Section 3.6 - Earnout (if applicable)

☐ No earnout
☐ Earnout provided:

• Maximum Earnout: $_____________
• Earnout Period: _____ years
• Performance Metrics: _________________________________
• Calculation: _________________________________
• Payment Timing: _________________________________
• Dispute Resolution: _________________________________

Article IV: Representations and Warranties of Seller

Seller represents and warrants to Buyer:

Section 4.1 - Organization and Authority

☐ Seller is duly organized and in good standing
☐ Seller has authority to enter this Agreement
☐ Execution does not violate any agreement or law
☐ No governmental approval required (except as disclosed)

Section 4.2 - Title to Assets

☐ Seller has good and marketable title to Purchased Assets
☐ Purchased Assets are free of liens and encumbrances (except as disclosed)
☐ Seller has right to transfer Purchased Assets

Section 4.3 - Financial Information

☐ Financial statements provided are accurate and complete
☐ Prepared in accordance with: ☐ GAAP ☐ Tax basis ☐ Other
☐ No material undisclosed liabilities
☐ No material adverse change since financial statement date

Section 4.4 - Taxes

☐ All tax returns filed and taxes paid through Closing
☐ No pending tax audits or disputes
☐ Sales tax properly collected and remitted
☐ Payroll taxes properly withheld and paid

Section 4.5 - Contracts

☐ Schedule of Material Contracts is accurate and complete
☐ Contracts are in full force and effect
☐ Seller is not in default under any Material Contract
☐ No notice of termination received

Section 4.6 - Intellectual Property

☐ Seller owns or has right to use all Intellectual Property
☐ No infringement claims pending or threatened
☐ No infringement of third-party rights known

Section 4.7 - Employees

☐ Employee list is accurate (Schedule 4.7)
☐ No collective bargaining agreements
☐ No pending employment claims
☐ Compliance with employment laws
☐ WARN Act not triggered (or compliance planned)

Section 4.8 - Litigation

☐ No pending litigation (except as disclosed on Schedule 4.8)
☐ No threatened litigation known
☐ No judgments or orders affecting the Business

Section 4.9 - Compliance with Laws

☐ Business operated in compliance with all applicable laws
☐ All licenses and permits current and in good standing
☐ No regulatory violations pending

Section 4.10 - Environmental Matters

☐ No environmental violations
☐ No hazardous substances on premises (except as permitted)
☐ No environmental claims pending or threatened

Section 4.11 - Condition of Assets

☐ Equipment in good working condition (ordinary wear excepted)
☐ Inventory is saleable in ordinary course
☐ No obsolete inventory (except as disclosed)

Section 4.12 - Customer and Vendor Relationships

☐ No notice of termination from material customers
☐ No notice of termination from material vendors
☐ Customer list is accurate (Schedule 4.12)

Section 4.13 - Insurance

☐ Insurance policies are in force (Schedule 4.13)
☐ Coverage is adequate for the Business
☐ No claims pending (except as disclosed)

Section 4.14 - Full Disclosure

☐ No material misrepresentation or omission
☐ Seller has disclosed all material information

Article V: Representations and Warranties of Buyer

Buyer represents and warrants to Seller:

☐ Buyer is duly organized and in good standing
☐ Buyer has authority to enter this Agreement
☐ Buyer has sufficient funds to complete transaction
☐ Execution does not violate any agreement or law

Article VI: Covenants

Section 6.1 - Pre-Closing Covenants of Seller

From signing until Closing, Seller shall:
☐ Operate Business in ordinary course
☐ Maintain Purchased Assets in current condition
☐ Maintain insurance coverage
☐ Preserve customer and vendor relationships
☐ Not dispose of assets outside ordinary course
☐ Not enter material contracts without Buyer consent
☐ Not change employee compensation materially
☐ Provide Buyer access for due diligence
☐ Notify Buyer of material developments

Section 6.2 - Efforts to Close

☐ Both parties shall use reasonable efforts to satisfy Closing conditions
☐ Both parties shall cooperate in obtaining required consents

Section 6.3 - Non-Competition (Seller)

☐ No non-compete
☐ Non-compete agreed:

• Duration: _____ years from Closing
• Geographic area: _________________________________
• Restricted activities: _________________________________
• Non-Compete Agreement attached as Exhibit C

Section 6.4 - Non-Solicitation (Seller)

☐ Duration: _____ years from Closing
☐ Applies to customers
☐ Applies to employees
☐ Applies to vendors

Section 6.5 - Transition Assistance

☐ Seller shall provide transition assistance for: _____ days/months
☐ Compensation: ☐ Included in Purchase Price ☐ Separate: $_____/month
☐ Consulting agreement attached as Exhibit D

Section 6.6 - Employee Matters

☐ Seller to terminate all employees at Closing
☐ Buyer may offer employment to employees (list on Schedule 6.6)
☐ Seller responsible for WARN Act compliance
☐ Seller responsible for all pre-Closing employee obligations

Article VII: Conditions to Closing

Section 7.1 - Buyer's Conditions Precedent

Buyer's obligation to close is conditioned upon:
☐ Representations and warranties remain true at Closing
☐ Seller has performed all pre-closing obligations
☐ No material adverse change in Business
☐ All required consents obtained
☐ Landlord consent to lease assignment
☐ No litigation threatening transaction
☐ Satisfactory completion of due diligence
☐ Buyer obtaining financing
☐ Lien searches satisfactory
☐ Other: _________________________________

Section 7.2 - Seller's Conditions Precedent

Seller's obligation to close is conditioned upon:
☐ Representations and warranties remain true at Closing
☐ Buyer has performed all pre-closing obligations
☐ Receipt of Purchase Price
☐ Assumption of Assumed Liabilities
☐ Release of personal guarantees: _________________________________
☐ Other: _________________________________

Article VIII: Closing

Section 8.1 - Closing Date and Location

Section 8.2 - Seller's Closing Deliveries

☐ Bill of Sale (Exhibit E)
☐ Assignment and Assumption Agreement (Exhibit F)
☐ Assignment of Lease(s)
☐ Assignment of Intellectual Property
☐ Assignments of Contracts
☐ Vehicle titles
☐ Non-Competition Agreement
☐ Third-party consents
☐ Good standing certificates
☐ Secretary's/Manager's Certificate
☐ FIRPTA Certificate (if applicable)
☐ Bulk sales compliance (if applicable)
☐ Keys, codes, and passwords
☐ Books and records
☐ Other: _________________________________

Section 8.3 - Buyer's Closing Deliveries

☐ Cash payment (wire transfer)
☐ Promissory Note
☐ Security Agreement
☐ Assignment and Assumption Agreement
☐ Secretary's/Manager's Certificate
☐ Evidence of insurance
☐ Other: _________________________________

Article IX: Indemnification

Section 9.1 - Seller's Indemnification

Seller shall indemnify Buyer against losses arising from:
☐ Breach of Seller's representations and warranties
☐ Breach of Seller's covenants
☐ Excluded Liabilities
☐ Pre-Closing operation of Business
☐ Pre-Closing tax liabilities
☐ Pre-Closing employee matters
☐ Environmental matters arising before Closing
☐ Fraudulent acts of Seller

Section 9.2 - Buyer's Indemnification

Buyer shall indemnify Seller against losses arising from:
☐ Breach of Buyer's representations and warranties
☐ Breach of Buyer's covenants
☐ Assumed Liabilities
☐ Post-Closing operation of Business
☐ Post-Closing employee matters

Section 9.3 - Survival of Representations

Section 9.4 - Limitations on Indemnification

☐ Deductible/Basket: $_____________ (claims must exceed before recovery)
☐ Tipping Basket: ☐ Yes (recover from dollar one) ☐ No (recover excess only)
☐ Cap on Indemnification: $_____________ (___% of Purchase Price)
☐ Exceptions to Cap: Fraud, intentional misrepresentation, title claims

Section 9.5 - Indemnification Procedures

☐ Written notice of claim within _____ days
☐ Opportunity to defend third-party claims
☐ Cooperation in defense
☐ No settlement without consent

Section 9.6 - Exclusive Remedy

☐ Indemnification is exclusive remedy (except for fraud)
☐ Waiver of other remedies

Article X: Termination

Section 10.1 - Termination Events

This Agreement may be terminated:
☐ By mutual written agreement
☐ By either party if Closing has not occurred by: _____________
☐ By Buyer if conditions precedent not satisfied
☐ By Seller if conditions precedent not satisfied
☐ By either party if material breach by other party

Section 10.2 - Effect of Termination

☐ No liability except for willful breach
☐ Confidentiality obligations survive
☐ Return of all due diligence materials

Article XI: General Provisions

Section 11.1 - Governing Law

This Agreement governed by laws of: State of _________________________________

Section 11.2 - Dispute Resolution

☐ Mediation first - Required before litigation/arbitration
☐ Binding Arbitration - Rules: _________________________________
☐ Litigation - Venue: _____________ County, _____________

Section 11.3 - Attorneys' Fees

☐ Prevailing party entitled to reasonable attorneys' fees
☐ Each party bears own costs regardless of outcome

Section 11.4 - Notices

All notices in writing to addresses stated above.
☐ Personal delivery
☐ Certified mail, return receipt requested
☐ Overnight courier
☐ Email (with confirmation for non-legal notices)

Section 11.5 - Entire Agreement

This Agreement (including Schedules and Exhibits) constitutes the entire agreement.

Section 11.6 - Amendment

Only by written agreement signed by both parties.

Section 11.7 - Assignment

☐ Buyer may assign to affiliate
☐ Neither party may assign without consent

Section 11.8 - Severability

Invalid provisions do not affect remaining provisions.

Section 11.9 - Counterparts

May be executed in counterparts; electronic signatures accepted.

Section 11.10 - Bulk Sales Compliance

☐ Bulk sales law waived by Seller indemnification
☐ Bulk sales compliance required - Notice given to creditors

Signature Page

SELLER:
| | |
|---|---|
| Entity Name | _________________________________ |
| By (Signature) | _________________________________ |
| Printed Name | _________________________________ |
| Title | _________________________________ |
| Date | _________________________________ |

BUYER:
| | |
|---|---|
| Entity Name | _________________________________ |
| By (Signature) | _________________________________ |
| Printed Name | _________________________________ |
| Title | _________________________________ |
| Date | _________________________________ |

Schedule of Exhibits

☐ Exhibit A: Promissory Note
☐ Exhibit B: Security Agreement
☐ Exhibit C: Non-Competition Agreement
☐ Exhibit D: Consulting/Transition Agreement
☐ Exhibit E: Bill of Sale
☐ Exhibit F: Assignment and Assumption Agreement

Schedule of Schedules

☐ Schedule 1.1(a): Furniture, Fixtures, Equipment
☐ Schedule 1.1(b): Inventory
☐ Schedule 1.1(c): Vehicles
☐ Schedule 1.1(d): Intellectual Property
☐ Schedule 1.1(e): Customer Contracts
☐ Schedule 1.1(f): Vendor Contracts
☐ Schedule 1.1(g): Equipment Leases
☐ Schedule 1.1(h): Real Property Leases
☐ Schedule 1.1(i): Accounts Receivable
☐ Schedule 2.1: Assumed Liabilities
☐ Schedule 4.7: Employees
☐ Schedule 4.8: Litigation
☐ Schedule 4.12: Customers
☐ Schedule 4.13: Insurance Policies
☐ Schedule 6.6: Employees to Receive Offers

Bill of Sale (Sample - Exhibit E)

BILL OF SALE

For good and valuable consideration, the receipt of which is hereby acknowledged, [SELLER NAME] ("Seller") hereby sells, assigns, transfers, and conveys to [BUYER NAME] ("Buyer") all of Seller's right, title, and interest in and to all of the Purchased Assets described in that certain Asset Purchase Agreement dated [DATE] between Seller and Buyer.

Seller warrants that it has good title to the Purchased Assets, free and clear of all liens and encumbrances except as set forth in the Asset Purchase Agreement.

SELLER:

Date: _______________ By: _______________________________

This template is provided for informational purposes only and does not constitute legal advice. Asset purchase transactions are complex and require professional guidance. Consult with a qualified attorney and accountant before executing any business acquisition documents.