What is an asset purchase?
This is an agreement between a buyer and seller to acquire a company’s assets. The buyer can cherry pick which assets it wants and leave the rest behind. Assets can be both tangible, such as offices and equipment, and intangible, such as intellectual property and corporate name.
Where have you heard about asset purchase?
Asset purchase is a familiar phrase associated with corporate mergers and acquisitions. It’s often used when a buyer is seeking to acquire a single division or specific business unit within a wider company.
What you need to know about asset purchase.
In an asset purchase agreement, the buyer will only choose to buy certain assets of the seller’s company. That means the seller will continue to own the assets not included in the sale and will still be liable for them.
In the majority of cases, an asset purchase protects the buyer as they'll only assume liability for the assets included in the purchase agreement.
Asset purchase is different from a stock purchase agreement in which company shares are sold. By purchasing assets instead of stock, the buyer avoids the problems associated with minority shareholders refusing to sell their shares.
Find out more about asset purchase.
Read our definition of stock purchase see how it differs from asset purchase in corporate mergers and acquisitions.