Asset Purchase Agreement

As you grow your business, you need to improve your workflow. This can be by purchasing new and better equipment, building or acquiring new facilities, or getting patents that will improve your process. If there’s an organization willing to sell any of these assets to you, you’ll need an asset purchase agreement to make it official.

But this also works both ways. Sometimes you can improve your process by selling off extra weight. Maybe you don’t need to make certain materials in-house, and a facility is better off being sold to a partner you can purchase materials from. It’s not uncommon for patents to be useful in processes or technologies in other fields. That revenue can help you build-out. So if you need to make a sale, you would also need a purchase agreement.

Without an agreement, you can’t confirm your new ownership or the payment you’re supposed to receive. To protect yourself as a buyer or seller, contact the corporate law attorneys at Tressler & Associates.

What Needs to Go Into an Asset Purchase Agreement?

Several details need to be defined and acknowledged in a purchase agreement to assure that the transaction is what everyone is expecting. Without clear guidelines, a seller can try to retain partial ownership, or the buyer can avoid paying a full sum in the way they originally promised. An agreement holds all parties accountable, and to do that, they need to have the following terms defined:

• Buyer & Seller: A purchase agreement has to define who owns the asset before the agreement and who will own it afterward. There should be no question of who owns what part of the asset either.
• Assets Being Purchased: The asset being purchased/sold has to be accurately detailed and explained. No one should question whether they sold something they didn’t mean to or received less than what they thought they were getting.
• Asset Valuation: The asset being sold/purchased has to be appropriately valued so the seller feels they are getting a good amount of revenue and the buyer doesn’t feel ripped off.
• Terms/Mode of Payment: How much the buyer is paying and how it’s being paid has to be put in writing. Payment can be in installments. Payment doesn’t have to be with cash, but other monetary options like stock, property, or a mix of the three.
• Relevant Property Law: Purchase agreements have to take into account local, state, and federal property law. The federal and state laws rarely change unless the buyer or seller is not based in Tennessee. Otherwise, they’re standard. Unless the buyer and seller are based in the same county, along with the asset, local laws will have to be implemented and addressed in the agreement.

What Kind of Assets Can Be Purchased?

There are specific kinds of assets that an asset purchase agreement can handle. These include physical assets and non-physical assets, such as:

• Plant and machinery: If you’re a manufacturer and you need a new location to expand your business or sell one to increase your cash flow, you can purchase/sell a manufacturing plant and its machinery.
• Stock: Stocks can grant one corporation some say in how another operates, granting both a partnership. In that partnership, the stock purchaser will gain access to the stock seller’s overall assets more often than not. The stock seller will gain significant cash flow in return.
• Real estate property: A piece of property doesn’t have to be immediately relevant to the buyer’s business to be acquired. If there’s a property you could use to expand your business, you can acquire it with an asset purchase agreement.
• Intellectual property: Intellectual property (IP) can be patents for inventions and processes, artistic and literary works, or designs and symbols. If there is something that you think can improve your business model for your regular operations or its brand, you can acquire it in a purchase agreement. You can also sell it if an IP you have isn’t useful to your business anymore.

Contact Tressler & Associates for Assistance Creating Agreements

These agreements are for the benefit of buyers and sellers. They provide legal assurances that allow both parties to rest easy knowing they will receive their payment or property. Without an attorney, you can find yourself signing an agreement that can trick you into owing more money or receiving less than you intended. We’ll write up the contract for you and the other party, or in collaboration with their legal team and read between the lines to make sure everything is safe.

Contact our corporate law attorneys at Tressler & Associates so you can acquire or sell the asset you need to.