Asset purchase agreement meaning

This Checklist sets out the key points to consider when advising a prospective claimant on a potential breach of warranty claim arising from a share purchase agreement (SPA). The same broad approach will apply to an asset purchase agreement (APA). For additional guidance on breach of warranty claims, see the related content links on the right-hand side. Read this Checklist together with Practice Note: Starting an SPA breach of warranty claim—a practical guide... Action Comments Review the SPA Check the: governing/choice of law provisions — is the agreement governed by English law? jurisdiction provisions — do the English courts have jurisdiction? warranty provisions and warranty limitation provisions — does the issue fall within the warranties and are you within the time limit to bring a breach of warranty claim? Note all deadlines in the agreement that could be relevant to any potential warranty claim... Review the disclosure letter Confirm that the issue has not been disclosed against...

Checklist This Checklist outlines the IP matters that commonly require attention when drafting share purchase agreements (SPAs). It also considers points to address when carrying out the related IP due diligence and structuring around such transactions. For information on the corporate elements of these deals, see: Share purchase agreement—overview. For guidance on key provisions and issues relating to IP in the context of a share purchase, see Practice Note: IP issues to consider in share purchase contracts. For information about IP due diligence, see: Precedent: IP due diligence questionnaire; and Checklist: Intellectual property due diligence in share purchase transactions—checklist This Checklist covers technology only to a limited degree. If IT represents a principal asset of the target company, more detailed warranties should be included in respect of, eg, IT systems and core software...

General checklist What follows is a checklist highlighting matters that a solicitor representing a company’s administrator (and, in some pre-appointment cases, the directors/company) disposing of a business and its assets ought to bear in mind when preparing a sale and purchase agreement (the Agreement). This checklist is suitable for both pre-pack scenarios and sales of the business and/or assets completed after administrators are in office. It is not comprehensive and, depending on the nature of the business, numerous additional points may arise. For further detail, see: Sale and Purchase of Assets—overview and Pre-packs—overview. We also, at points, refer to seeking information from the directors. That will not invariably be feasible, eg where the situation is hostile. Accordingly, if the directors are engaged, they should be able to provide the information and will often be best placed to do so; however, where the position is hostile, or if you act solely for the administrators, any enquiries should be directed to the administrators, or at least channelled via them to the...

Banking & Finance—November 2025 case round-up Westfield Park Ltd v Harworth Estates Investments Ltd [2025] EWCA Civ 1374 Interpretation of contract—deferred consideration clause The Court of Appeal upheld Westfield Park Ltd’s appeal against HHJ Klein’s ruling on the correct construction of an agreement dated 14 October 2021 (the ‘Agreement’) for the sale and purchase of York Holiday Park Development. The key question was whether the judge at first instance had properly read a deferred consideration provision in Schedule 4 as triggering an additional payment from Westfield to Harworth Estates Investments Ltd when the Coal Authority confirmed that static caravans could be located within a ‘Zone of Influence’ surrounding two mineshafts. The appellate court criticised the departure from the contractual wording in favour of a purposive construction of the relevant terms. It held that the judge failed to begin with the objective, natural meaning of the Agreement and did not correctly apply the established principles of contractual interpretation reaffirmed in Arnold v Britton and Wood v Capita Insurance...

Dialog Semiconductor Ltd v HMRC [2025] UKFTT 1188 (TC) The appellant sought to purchase Atmel, a US microchip manufacturer, and the parties signed a merger agreement. Under that deal, Atmel was barred from inviting competing bids; however, where an unsolicited superior proposal arose, it could terminate by paying a US$137m termination fee, subject to the appellant’s right to match. In due course, a better bid materialised and Atmel ended the agreement and paid the fee. Following an enquiry, HMRC issued a closure notice assessing the fee to corporation tax as a chargeable gain under section 22 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), on the basis it was a capital sum derived from an asset. The notice was appealed. It was agreed in advance of the hearing that the FTT would address only whether the fee came within s 22(1)(c) as a capital sum ‘received in return for forfeiture or surrender of rights, or for refraining from exercising rights’. HMRC maintained that, if the FTT found...

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FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: In 2027, stamp duty and SDRT are set to be superseded by a single, self‑assessed tax on securities — the securities transfer charge (STC) — to be paid and reported via a new online portal. The STC’s core features are expected to broadly reflect the proposals consulted on in 2023. Finance Act 2026 (FA 2026) confers a power for secondary legislation to let taxpayers trial the digital service, self‑assessing their stamp taxes on securities liabilities and submitting transactions electronically. For further details on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025—Tax analysis—Stamp and transfer taxes Tax update spring 2025—Stamp taxes on shares modernisation Tax update spring 2025—Tax analysis—Stamp and transfer taxes TAMD 2023—Stamp taxes on shares modernisation TAMD 2023—consultation—stamp taxes on shares Tax Administration and Maintenance Day—27 April 2023—Stamp and transfer taxes The government also consulted on modernising and clarifying...

Heads of terms A business purchase (the target business) typically starts with settling the key commercial points—price, structure of the deal, due diligence steps, exclusivity provisions and timetable. These points are commonly negotiated by the parties themselves, or alongside their accountants and other professional advisers, and then set out in heads of terms, sometimes called a ‘letter of intent’ or ‘memorandum of understanding’. See Practice Note: Heads of terms—share and asset purchases. Where environmental risks are known or suspected, the heads of terms might cover: providing the buyer with any existing environmental report(s) a requirement for a reliance agreement or collateral warranty, giving the buyer the benefit of those report(s) a process allowing the buyer to undertake a phase 1 environmental audit or phase 2 ground investigations headline terms for an environmental indemnity or environmental insurance What happens during the preliminary phase?...

The properties held by a company can be obtained by two routes: an acquisition of assets owned by the company (an asset purchase), or an acquisition of the company’s shares (a share purchase) Asset purchase On an asset purchase: the buyer takes the undertaking as a going concern and may select which elements of the business, together with any assets and liabilities, it wishes to take on every property owned, used or occupied by the undertaking must be conveyed, assigned or transferred to the purchaser within the sale documents Properties may be sold outright, or the buyer may be granted a fresh lease. Where a leasehold interest is involved (whether already existing or newly created), particular issues arise. For more information, see Practice Note: Leasehold property issues arising on an asset purchase. The properties will be identified in the sale agreement and it is the property interests themselves that are transferred, rather than the company’s...

[ insert date of letter ] [ insert name of employee ] [ insert address of employee ] Dear [ insert name of employee ] [ insert name of Company ] (the Company ) I am pleased to inform you that the directors of the Company have authorised the award of an enterprise management incentives (EMI) option ( Option ) to you. Enclosed is a copy of the option agreement, which must be signed by you and the Company for the grant of the Option to become effective. The Option gives you the right to purchase [ insert maximum number and class of shares which can be exercised pursuant to the Option agreement ] shares in the Company ( Shares ) at a price of [ insert exercise price of shares ] per Share [ upon an ‘Exit’ event of the Company (which broadly means a takeover of the Company [ , an asset sale or a listing of its shares ] [ , a...

Headed notepaper of seller/assignor To: [ Insert name and address of contractual counterparty ] [ Insert date ] Dear [ insert contact name at contractual counterparty ], Request for consent to assignment of contract We make reference to the agreement dated [ insert date ] between [ insert name of seller/assignor ] and [ insert name of contractual counterparty ], pertaining to [ insert details of contract ] (the Contract )...

1 Definitions and interpretation 1.1 [ Include the following additional definitions in the definitions clause of the Asset purchase agreement (if required) ] Accounts Date • [ specify day and month ] 20[ specify year ]; Business • the undertaking of [ provide a description of the business being acquired ] carried on by the Seller, together with all other activities, including those ancillary, incidental to, or connected with that undertaking, as conducted by the Seller; Buyer • [ provide details ]; Completion • the finalisation of the sale and purchase of the Business through the Parties performing their respective obligations in accordance with clause [ x ]; Completion Date • [ the day on which Completion occurs OR a date no later than the [ third ] Business Day after the date on which the last of the Conditions is satisfied or waived, or the date to which Completion is deferred ] pursuant to clause [ x ]; Data Protection...

If there is a share purchase, the employer’s identity remains the same and, if the incoming owner wishes to have a key employee or the MD enter into a fresh long-term agreement, this will need to be negotiated between the parties. For further details on employment issues in share purchases, see Practice Notes: Share purchases—employment issues acting for the buyer Share purchases—employment issues acting for the seller Where an asset purchase falls within the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246, then—subject to an employee’s right to object to the transfer (see Practice Note: Employee transfer—Employee right to object to the transfer)—the employment contracts of those employed by the transferor and assigned to the organised grouping of resources or employees that is the subject of the relevant transfer, and which would otherwise be ended by the transfer, move automatically to the transferee and continue after the transfer as though originally made between the employee and the transferee...