Acquisition or conveyance of corporate assets is a common way to transfer business ownership. The asset purchase or sale may be preferable to purchase or sale of the stock of the corporation owning the assets. Acquiring the stock of the corporation means acquiring corporate liabilities as well as assets. Purchasing the stock also involves buying all of the assets of the corporation rather than only those of interest. The asset purchase or sale arrangement involves several key issues. Central to the transaction is defining the list of target assets. Any liabilities being assumed should be specifically stated as well as contract assignments. Payment terms are also critical and representations on both sides of the transaction will be important as determined through due diligence. Finally, warranties are critical. The terms of these transactions are typically structured in an Asset Purchase Agreement supported by a series of exhibits including a Bill of Sale, Promissory Notes, Security Agreements and asset and liability lists.
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