Define Asset Purchase Agreement

The determination and taxation of behaviours is an important objective of the APA. [1] The buyer must represent his power to acquire the asset. The seller must represent his power to sell the asset. In addition, the seller argues that the purchase price of the asset is equal to its value and that the seller is not in financial or legal difficulty. Of course, the agreement should also talk about price. In addition to indicating the price paid by the buyer to the seller, you want the agreement to specify how the assets are paid. In many cases, a buyer will pay for all the assets at the conclusion of the contract. However, in some cases, the transaction will be tied to seller financing. If this is the case, it may be necessary to sign a commitment ticket for the rest of the purchase price. If the transaction contains guarantees, you should also include this information in the asset purchase contract. The oil and gas industry does not distinguish between an asset and the purchase of shares when it designates its corresponding sales contract. In this sector, whether it is the purchase of assets or shares, the final agreement is called the Purchase and Sale Contract (PSA).

In addition, there may be important contracts that are not transferable or some licenses and authorizations may be clear to the seller. Sometimes a buyer wants to get as many customer relationships as possible, so he can choose to buy shares as opposed to assets. The main advantage of an asset acquisition is that a buyer can choose the assets and liabilities he wants to acquire. The risk of hidden debt is generally lower than that of buying shares. Stocks must be determined and an assessment mechanism must be put in place after closing. This value is generally estimated. At the close, an inventory review is usually conducted, which changes the estimated value in real terms and thus changes the purchase price. A buyer will normally prefer to buy a company`s assets, while the seller prefers to sell the shares. The reason is that an investment purchase allows a buyer to choose exactly what assets they are buying and to identify precisely which liabilities they want to assume. Debts are also covered by price negotiations; If the assets are credit-related, the buyer and seller must decide who is responsible.