asset purchase agreement

An asset purchase agreement is a contract under which a seller transfers to a buyer a portion or all of the assets of an entity .

Although the content of an asset purchase agreement may vary in complexity depending on the sophistication of the transaction, it commonly includes the following sections:

• Recitals that describe the relevant background of the transaction.
• A list of definitions of the words that shall rule the interpretation of the asset purchase agreement.
• The terms and conditions for the sale and purchase of the assets , including the purchase price and the terms and conditions for its payment.
• The terms and conditions for the closing of the transaction, if any.
• The representations and warranties of the seller and the buyer regarding, among others, their authority to enter the asset purchase agreement, the legal characteristics of the sold assets , and any other relevant matter related to the transaction and the assets .
• Post-closing obligations of the parties, such as a non-compete clause.
• The indemnification rules, such as the procedure for indemnification, maximum indemnification limitations, prohibition for double compensation, and third-party claims.
• Rules for the termination of the asset purchase agreement.
• Other miscellaneous clauses, such as applicable law and jurisdiction , arbitration clause, and other interpretation rules.

An asset purchase agreement may also be referred to as “APA”.

[Last reviewed in June of 2022 by the Wex Definitions Team ]

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