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Asset Purchase

An asset purchase is a transaction in which a buyer acquires specific assets of a company rather than buying the entire company, including its liabilities. The assets acquired can include physical items like equipment and inventory, as well as intangible assets such as patents, trademarks, and customer lists. In an asset purchase, the buyer can choose which assets to acquire and typically does not assume the seller's liabilities unless specifically agreed upon. Asset purchases are common in business acquisitions when the buyer wants to avoid taking on the seller’s debts or other obligations.

Example

A company might purchase another company’s manufacturing equipment and customer contracts without buying the entire business or assuming its debts.

Key points

• A transaction where a buyer acquires specific assets of a company rather than the entire business.

• The buyer typically does not assume the seller's liabilities.

• Allows the buyer to acquire valuable assets without unwanted obligations.

Quick Answers to Curious Questions

A buyer might prefer an asset purchase to avoid assuming the seller’s liabilities and to acquire only the assets needed for their operations.

Assets can include physical items like equipment and inventory, as well as intangible assets like patents, trademarks, and customer lists.

In an asset purchase, the buyer acquires specific assets of a company, while in a stock purchase, the buyer acquires ownership of the entire company, including its liabilities.