This template asset purchase agreement is for use in the sale of all or substantially all of the assets used in the operation of the business of a private company for cash. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. Click here to see recent examples of publicly filed asset purchase agreements in Market Standards. In an asset purchase agreement, a buyer purchases certain reasonably enumerated assets from a seller. Unlike a stock purchase, a buyer does not purchase the shares of the company from its stockholders. As a result, the ownership of the company does not change at the end of the transaction. Also, unlike a merger, no parties or subsidiaries merge and, as a result, each party to an asset purchase will maintain its separate legal existence after consummation of the transaction. Nor do buyers in an asset purchase agreement succeed to all of a seller's assets and liabilities by operation of law, as occurs in a merger. Rather, the parties must agree on which assets will be sold, which liabilities will be assumed, and which assets and liabilities will remain with a seller. Structuring an acquisition as an asset purchase has benefits and drawbacks. Asset purchases are often the most tax favorable to buyers and the least tax favorable to sellers, unless a seller is a pass-through entity such as an LLC or an S corporation. One of the benefits of an asset deal is that, subject to doctrines on successor liability, a buyer is selecting liabilities to be transferred to a buyer and thus, in theory, is not assuming unknown liabilities. Less commonly, the rationale for an asset deal may depend on the jurisdiction; in some states that do not allow for cross-species mergers, or where the cross-species merger is difficult or expensive, the asset purchase may reasonably be the only available structure to acquire assets. For additional information on the benefits and drawbacks of an asset purchase agreement, see Asset Purchase, Stock Purchase, and Merger Structures: Benefits and Drawbacks. Asset purchase agreements are often the most complex of the three main acquisition structures, principally because the assets to be purchased, and the liabilities to be transferred to the buyer, have to be identified with reasonable certainty so that the parties know what is being sold and purchased. Sellers in an asset deal must transfer intellectual property assets, assign individual contracts to a buyer, transfer licenses and government authorizations to a new entity, and deal with the remaining assets and liabilities. These requirements often result in extensive disclosure schedules and lengthy due diligence. For an annotated disclosure schedule template, see Disclosure Schedule to Asset Purchase Agreement. Asset purchase agreements must be tailored to the assets involved and the circumstances of the sale, in particular, the business in which the assets are used. This agreement is drafted to be used in the sale of a business engaged in manufacturing and/or the sale of physical products, and this fact pattern is reflected throughout the agreement. For example, the buyer of real property will demand specific representations and document deliverables at closing. Parties in the sale of technology assets must account for intellectual property (IP) representations and negotiate the transfer, licensing, or other treatment of IP rights. The regulatory schemes that are addressed in this template are those that are generally applicable without regard to industry, such as antitrust, tax, ERISA, environmental, anticorruption, and federal securities regulation. This template, including the particular assets to be acquired, will likely need to be tailored to suit the particular circumstances of a transaction. The template is intended to be in accord with the provisions of the Delaware General Corporation Law. This template includes terms that are, on the whole, more pro-seller. For a template that is generally pro-buyer, see Asset Purchase Agreement (Pro-Buyer) (DE). See Asset Purchase Agreement Basics for additional information regarding common structural and mechanical issues presented in most asset purchase agreements. Market Standards enables users to search, compare, and analyze its comprehensive database of transactions using over 150 detailed data points to filter search results. You can customize any search to your needs by adding filters or modifying the search criteria. To compare selected state laws on asset sales and appraisal rights, see the Corporate and M&A section of the State Law Comparison Tool.