Glossary · Deal documents
Asset purchase agreement
Definition
An asset purchase agreement is used when a buyer acquires specific assets of a business, such as contracts, equipment, IP and staff, instead of the company itself. The buyer can leave unwanted liabilities behind, but each contract and licence may need to be transferred one by one.
Related terms
Share purchase agreement The contract by which a buyer acquires the shares of a company, with the price, warranties and conditions. Carve-out The sale of a division or business unit that has to be separated from its parent company. Change of control clause A contract term that lets the other party end or renegotiate the contract if the company is sold. Confidential information memorandum The detailed sales document a seller's adviser sends to buyers after they sign an NDA. Disclosure letter The seller's list of known exceptions to its warranties, which limits what the buyer can later claim for. Indemnity A promise to repay a specific loss in full, often used for known risks found in due diligence. Letter of intent A mostly non-binding document that sets out the main terms of a deal before the final contract is negotiated. Material adverse change A clause that lets a buyer walk away if something seriously damages the business between signing and closing.