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An asset purchase agreement (APA) is a contract selling business assets. It lists the assets, price and closing date, and it can cover all assets or only some. Buyers and sellers get a worked example and a free PDF or Word template here.
An asset purchase agreement is a written contract in which a seller moves ownership of named business assets to a buyer for an agreed price, while the company itself stays with its owners.
You may also see it called an asset purchase and sale agreement, a business purchase agreement or an asset sale agreement. An acquisition of assets is the deal itself: the buyer acquires selected assets of a company instead of the company. The agreement is the document that sets out that deal.
A typical asset purchase example is a buyer taking a shop's equipment, recipes and name for an agreed price, while the seller keeps everything left out of the sale. The sample below uses made-up names and amounts, and it shows where each term goes in our template.
Sample deal, made-up names and amounts: Harbor Street Bakery LLC (Seller) sells its shop assets to Northside Foods Inc. (Buyer). Dana Reyes, the owner of the bakery, signs as the Principal.
| Term | Sample entry | Where it goes in the template |
|---|---|---|
| Purchase Price | $85,000 | Section 2(a) |
| Deposit | $8,500 | Section 2(b) |
| Payment at Closing | $46,500 in cash and a $30,000 promissory note | Section 2(c) and Section 4(c) |
| Closing date | June 30, 2027 | Section 4(a) |
| Non-compete | 12 months, retail bakery sales | Section 9 |
| Assets sold | Ovens and equipment, inventory, recipes and shop name, books and records, goodwill | Exhibit A |
| Assets left out | Delivery van, cash in the bank | Exhibit B |
Price by asset in this sample: ovens and equipment $40,000, inventory $5,000, recipes and shop name $30,000, books and records with goodwill $10,000. The total is $85,000.
The exhibits answer the question both sides ask later: what was sold, and what stayed with the seller.
Common examples of assets in an asset purchase range from physical items such as equipment to intangible ones such as goodwill and customer lists:
Exhibit A of the template is a checklist of asset types, and Exhibit B lists anything you leave out of the sale. The Exhibit A steps below name no item for premises or land, so a sale that includes them needs its own terms and conveyance documents.
Use an asset purchase agreement when the buyer and seller want to choose which assets change hands instead of selling the whole company. This fillable purchase agreement template may be used in a variety of situations:
A different document fits when the deal is a sale of company shares, a sale of a few separate items or a sale of land rather than a sale of selected business assets:
The primary difference is that in an asset purchase the buyer and seller agree on the specific assets sold, while in a stock purchase the buyer acquires the shares and the company comes with all its assets and liabilities.
| Point | Asset purchase | Stock (share) purchase |
|---|---|---|
| Who sells | The company or business | The individual shareholders |
| What the buyer gets | Only the assets the agreement lists | Shares in the company, with everything in it |
| Liabilities | The parties choose which ones move to the buyer | They stay in the company the buyer now owns |
| Paperwork | Specific terms for each asset, with possible retitling | Typically less complex, since the buyer takes the company as a whole |
| What the seller keeps | The company and any asset left out | Nothing in the company once the shares are sold |
An asset purchase does not guarantee that the buyer is free of every old debt or claim. Ask a lawyer whether any of them can follow the assets to the buyer in your deal.
In short:
An asset purchase lets a buyer choose which parts of a business to acquire, and that choice brings benefits and trade-offs for both the buyer and the seller. Weigh both sides before you settle on a deal structure.
The main advantages of an asset purchase are the choice of assets, a narrower due diligence review and possible future tax savings:
The main disadvantages of an asset purchase are the extra transfer paperwork, renegotiated contracts and a price that can run higher:
An asset purchase usually moves through five stages, from the first offer to the signed contract. The buyer and seller settle the assets and the price along the way, and the final agreement records every term they reached. These are the stages in their usual order:
The buyer starts by telling the seller it intends to purchase assets of the target business, usually in a letter of intent that outlines the proposed terms. This letter is the starting point for negotiating the contract.
After the letter of intent is sent, both sides decide how to value the assets, because that method sets the purchase price. Fair market value is a commonly used method of valuation.
The parties then identify each asset in the sale and each asset that stays with the seller, and the final contract lists them.
Once both sides agree on the final terms, the contract containing all of those terms is prepared, often starting from a template like this.
After the agreement is finalized, each party signs it, and possession of the assets passes from the seller to the buyer under its closing terms.
Download Formspal’s easy-to-understand and customizable Business Purchase Agreement now.
An asset purchase agreement commonly includes the recitals, the asset description, the purchase price, warranties and representations, indemnification and covenants, and the closing terms. The exact wording varies with the deal:
The recitals usually contain the names of each party, their addresses, and the date of signing.
The asset description names each asset for sale, defines it and gives the details that identify it, along with any exclusions or related liabilities. It is better to be as specific and descriptive as possible about each asset.
The purchase price section gives the price for each asset, the total for all assets, the deposit and the payment terms.
Warranties and representations are the claims about the assets and the transaction that the buyer and the seller rely on. Most come from the seller and cover the quality, condition or legal status of the assets, such as the purchase date, working condition or approvals.
These conditions are particularly important and helpful if either side decides to take legal action against the other in the future.
Indemnification terms are one party's promise to cover the other's specified losses, which can include third-party claims and pre-closing liabilities as well as losses from a breach, subject to any limits in the agreement. Covenants are promises within the agreement to do or not do something, such as non-competes or non-disclosure promises, depending on the type of transaction.
The closing terms list the pre-conditions to meet before the sale closes, such as approval from third parties or the government, repairs by the seller and closing price adjustments. They also give the closing date or the date by which the transfer should be completed. Some parties also prepare an asset purchase closing statement that shows the final amounts paid and adjusted.
Mass. Gen. Laws ch. 259, § 1 sets a signed-writing rule for an action on a contract for the sale of land, or of any interest in land. Utah Code § 25-5-3 makes a contract for the sale of any land or interest in land, or for a lease longer than one year, void unless it or a note of it is in a signed writing. W. Va. Code § 36-1-3 makes a contract for the sale of land, or the lease of land for more than one year, unenforceable unless it or a note of it is in a signed writing. Each rule has its own conditions:
| State | Rule for a contract to sell land | Citation |
|---|---|---|
| Massachusetts | An action on a contract for the sale of land, or of any interest in land, needs the contract, or a memorandum or note of it, in writing and signed by the party to be charged or by a person that party lawfully authorized. | Mass. Gen. Laws ch. 259, § 1 |
| Utah | A contract for the sale of any land or interest in land, or for a lease longer than one year, is void unless it, or a note or memorandum of it, is in writing and subscribed by the party making the sale or lease, or by that party's lawful agent authorized in writing. | Utah Code § 25-5-3 |
| West Virginia | A contract for the sale of land, or for a lease of land for more than one year, is not enforceable unless it, or a note or memorandum of it, is in writing and signed by the party to be charged or by that party's agent. | W. Va. Code § 36-1-3 |
This table is a sample of states, not a full list, so ask a lawyer about land in any state, including the three above.
A sale that includes land or a building can also carry seller disclosure duties. N.H. Rev. Stat. Ann. § 477:4-c says that before the execution of any contract for the purchase and sale of any interest in real property which includes a building, the seller shall disclose information on any private water supply system and the sewage disposal system, and state in writing if that information is unknown. 27 V.S.A. § 380 says that prior to or as part of a contract for the conveyance of real property, the seller shall provide the buyer with flood information, including the official flood insurance rate map or notice that one is unavailable.
Going by the steps below, Exhibit A of this template has no tick item for land or a building. For the land itself, see our land purchase agreement and real estate purchase agreement templates.
This free business purchase agreement template, titled Asset Purchase and Sale Agreement, comes as a fillable PDF and as a Word file you can edit. Pick the Word file for a simple asset purchase agreement whose wording you want to change, and the PDF when you only need to type into the fields.
Follow these steps to fill out the free FormsPal asset purchase agreement template, titled Asset Purchase and Sale Agreement. Download the PDF, then fill it in on screen with the FormsPal PDF editor or print it and complete it by hand. Have the names, addresses, price, closing date and asset list ready before you start filling in the form.
The screenshots under each step show the FormsPal Asset Purchase and Sale Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
On page 1, enter the effective date first. This is the date from which the agreement goes into effect. Then enter the Seller and its entity type, the Principal, and the Buyer and its entity type.
Name the Business in the first recital. Tick "all" or enter a percentage for the Principal's ownership, add the name the Buyer will operate under in Section 1(a), and enter the Purchase Price in Section 2(a).
On page 2, go to Section 2(b) and enter the deposit amount if the Buyer is making a deposit. If no deposit is required, select the second option.
In Section 2(c), select the first option for payment in cash at Closing. Select the second option if the buyer is required to evidence a part of the purchase value through a promissory note at the deal closing. Then enter the note amount.
In Section 3, select the first option to give the Buyer a termination deadline, and enter that date. Select the second option if neither party gets a termination right unless the other is in default. Then enter the Closing date in Section 4(a).
On page 3, find Section 4(c). If the buyer is required to make any kind of cash payment at closing, mention the same in sub-clause (c). Enter the cash amount the Buyer delivers at Closing.
In Section 5, tick whether the Seller ships the inventory and personal property or the Buyer picks it up or arranges shipment.
On page 4, read the note at the top of Section 6. Strike out any representation or warranty that does not apply.
On page 5, in Section 6(f), enter the fiscal years ended for the balance sheets and statements the Seller has given the Buyer.
In Section 9, tick the first option if both sides have agreed to a non-compete, and enter the number of months. Keep the period reasonable, and ask a lawyer how long a non-compete can run where it applies.
On page 7, if you chose the non-compete, describe the products or services the restricted business offers for sale. If no non-compete has been agreed to, select the second option in clause 9.
In Section 11, enter the Seller's address, telephone number and email for messages between the parties.
On page 8, enter the Buyer's address, the person it is to the attention of, a telephone number and an email.
Indicate the governing law. In clause 18, mention the State law that will govern the APA. Also enter the county and state where arbitration takes place, unless it is held virtually.
On page 9, name the broker in Section 19. In Section 22, select the first option and enter the number of weeks if the Principal will provide transition services.
On page 10, select the second option if no transition services have been agreed upon. Select the third option if customized transition services have been agreed upon, and write them on the lines provided.
On page 11, the Seller and the Buyer each sign above their printed Name and Title lines, and the Principal signs in the Principal block. Collect all three signatures before you hand out copies.
Exhibit A lists the items that transfer from the Seller to the Buyer. On page 12, tick the accounts receivable and inventory items that are part of the sale and strike out the ones that are not.
On page 12, tick each item that transfers. For the assigned contracts and the intellectual property, list the details on the lines provided. Then tick the furniture and equipment item and the permits item if they apply.
On page 13, tick each remaining item that transfers: actions, prepaid expenses, warranty rights, insurance benefits, books and records, and goodwill.
On page 14, list on the lines provided the name of each asset that is excluded and will not be transferred.
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Either the buyer or the seller can prepare the first draft of an asset purchase agreement, often with a lawyer, and the other side then reviews and negotiates it. This template gives either side a starting text.
A purchase counts as an asset on the buyer's books when what was bought has lasting value to the business, such as equipment or a customer list. An everyday expense does not.
The buyer usually enters each purchased asset on its books at a value based on the price paid, and the seller removes the sold assets and reports any gain or loss. A price for each asset in the agreement gives both sides the same figures to work from. Ask an accountant how that split affects your taxes.
Yes, the free PDF template has fillable fields, so you can type your entries on screen and print the document for signatures. You can also download the Word version and edit it in a word processor.
Gather the following documents and details before you start filling in the asset purchase agreement template:
With those in hand, you can go through the form from the first page to the exhibits without stopping.
Several sections give you two or three boxes, such as the deposit, the payment method, the termination right and the transition services. Tick the box in the free template that matches your deal and leave the others empty.
The principal is the owner of the seller's business, named in the opening paragraph of the free template and given a signature line on the signature page.
General information, not legal or tax advice.
