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What Is an Asset Purchase Agreement?

Companies will enter into numerous agreements throughout their operation lifetime, with individuals, companies or both. Agreements may result in contracts such as an asset purchase agreement.

  1. Background

    • Selling assets may occur for a few different reasons. A company may divest one of its operational divisions, therefore selling unused assets; sell old units that have no value; or offer current assets when selling or closing a business.

    Features

    • Asset purchase agreements will often include information relating to sales terms, assets involved in the deal, and a long list of legal business terms. This information provides both parties with a clear understanding for actions and rights to the assets.

    Considerations

    • Publicly held companies may need input or approval from the board of directors or shareholders prior to selling assets. The sale of assets may occur during a merger or acquisition, consolidation or reorganization. Shareholders will need to approve these agreements because they will typically change their ownership stake in the company.

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