Deal Structure

Asset Purchase Agreement (APA)

The definitive legal contract governing an asset sale — specifying exactly which assets and liabilities are being acquired, the purchase price allocation, representations and warranties, and closing conditions.

Key Insight

The APA is where the LOI becomes binding. Everything you negotiated in the letter of intent gets translated into enforceable legal terms here — and every ambiguity in the LOI becomes a negotiation at the APA stage.

Key Components of an APA

Purchased assets schedule: An explicit list of every asset being acquired — equipment, vehicles, inventory, customer lists, contracts, intellectual property, phone numbers, domain names. If it's not on the list, the buyer doesn't get it.

Excluded assets: Assets the seller is keeping — typically cash, certain receivables, personal property, and assets unrelated to the business.

Assumed liabilities: The specific liabilities (if any) the buyer is taking on. In most SMB asset sales, buyers assume minimal liabilities — no pre-closing debt, no pending lawsuits, no unfunded obligations.

Purchase price and allocation: Total price and how it's allocated among asset classes (inventory, equipment, goodwill, covenants not to compete). Allocation has tax implications for both parties.

Representations and warranties: Seller's factual representations about the business — financials are accurate, no undisclosed liabilities, no pending litigation, contracts are in good standing. Breaches create indemnification claims.

Indemnification provisions: Who owes what to whom if representations prove false after closing. Includes caps, baskets, and survival periods.

Closing conditions: What must be true on the closing date — financing secured, key employee agreements signed, landlord consent obtained, licenses transferred.

APA vs. Stock Purchase Agreement

In an asset sale, the APA is the primary document. In a stock sale, the equivalent is a Stock Purchase Agreement (SPA) — which transfers ownership of the entity itself rather than its individual assets.

Free Prescore — No Credit Card Required

Apply this to a real deal in minutes. No account, no commitment.