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Asset Sales Agreement

This document is usually executed in cases of mergers and acquisitions in which an acquiring company acquires either the assets and/or shares of the company, or in cases where the buyer wishes to acquire the assets of a company to expand its own business. In the context of a merger or acquisition transaction, asset sales agreements have a number of advantages and disadvantages compared to the use of an equity (or share purchase) or merger agreement. In the event of a capital acquisition or merger, the buyer receives all the assets of the target entity without exception, but automatically assumes all the liabilities of the targeted entity. In addition, a contract for the sale of assets not only allows for the transfer of part of the assets (which is sometimes desired), but also allows the parties to negotiate the commitments of the objective expressly assumed by the buyer and allows the buyer to leave behind liabilities that he does not want to accept (or of which he knows nothing). One of the disadvantages of an asset sale contract is that it can often lead to a greater number of change of control issues. For example, contracts held by a target entity and acquired by a buyer often require the counterparty`s agreement as part of an asset agreement, whereas it is less common for such consent to be required in connection with a share sale or merger agreement. Instead of acquiring all the shares of a company and therefore both its assets and liabilities, a buyer will very often prefer to take over only certain assets of a company. As a rule, the company sells the assets itself when buying assets, while in the case of a sale of shares, it is the individual shareholders who are the sellers. Tangible capital assets may be listed separately or mentioned in the agreement. These include office furniture, computers, literature, inventory, telephone installations, tools and equipment.

The conditions of sale and the price should be indicated in the contract. A given language should be used in the simple aid purchase agreement, which talks about the buyer`s responsibility for liabilities that may be related to assets. If there are unpaid invoices with suppliers or sellers, it should be agreed, before the end of the sale, whether the buyer assumes the commitments. Where there are liabilities that the buyer does not incorporate into the purchase, the parties must ensure that the purchase is not made for less than the fair value of the assets and that the entity remains sufficiently capitalized after the sale to pay its debts and liabilities. Otherwise, the transaction may be considered fraudulent. The main advantage of an asset purchase is that a buyer can choose the assets and liabilities they want to acquire. . . .

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