If your business wants to acquire all or part of another business, you can structure the transaction through an asset purchase. Compared to a share purchase, asset purchases have certain advantages and disadvantages from a buyer\u2019s perspective that you should be aware of. Hence, this article will summarise some key points to consider in an asset purchase. <\/p>\n\n\n\n
Asset acquisition is one of the two main ways you can structure the purchase of another business. As the name suggests, an asset acquisition is where you purchase a business\u2019 underlying assets rather than the business itself through a share purchase<\/a>. These assets can include:<\/p>\n\n\n\n To execute an asset purchase, each asset must be sold according to the legal requirements for transferring that asset. For example, the land must be transferred through a conveyance process. In addition, ordinary property like a machine will usually be sold with a deed certifying the sale. <\/p>\n\n\n\n The asset purchase agreement is a legal document that lists the assets you will acquire. It will also detail the terms and conditions under which you acquire the assets.<\/p>\n<\/div>\n\n\n\n Unlike a share purchase, an asset acquisition is not limited to transactions between limited companies. In fact, if you wanted to acquire an unincorporated business’<\/a> entire operation, you would have to structure the transaction as an asset purchase. <\/p>\n\n\n\n Regardless of the seller’s business structure, you can choose how you wish to incorporate the newly-purchased assets into your business. For example, you may simply wish to absorb the assets into your limited company. Alternatively, you can create a new company to own and manage the assets within your business group. Consider the following example. <\/p>\n\n\n\n Say ABC Ltd is a manufacturing and distribution business. To conduct its distribution business, ABC Ltd has:<\/p>\n \n You own a company that operates solely in distribution. Hence, you decide you want to make an offer for a portion of ABC Ltd\u2019s business. Rather than make a bid for ABC Ltd entirely, you could choose which of its assets are closely related to your distribution business.<\/p>\n <\/p>\n<\/div>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nStructuring an Asset Acquisition <\/h2>\n\n\n\n
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