Due Diligence Asset Purchase Agreement

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Often the contract for the sale of assets is signed, but the conclusion does not take place until due diligence has been concluded. In this case, the asset purchase agreement contains provisions relating to the seller`s activity prior to the conclusion. First, the annual accounts of the owner company for the last 3 to 5 years should be subject to a detailed review. An analysis of the company`s finances with respect to all inflows of assets to be acquired will reveal many of the problems that could arise in the event of an asset sale. Documents relating to all investments in the company, from founders to all convertible debt securities, to all subsequent investments, should be subject to a review of agreements relating to the sale of the company`s assets. Acquiring only a portion of a seller`s assets requires much of the same due diligence activities as the acquisition of the business. In addition, similar detailed due diligence is required in the business sectors, which may not be directly related to the acquisition of assets. When buying shares, the buyer buys the shares of the target entity, which means that he buys all the assets and liabilities of the target entity (including off-balance sheet and unidentified liabilities). A buyer may exclude certain assets and liabilities, which requires a restructuring of the business before the sale of shares. An agreement to sell shares in a company is usually referred to as a share purchase agreement. Prepaid assets can identify information about existing agreements for maintenance, support or other prepaid asset-related services. These agreements may cover third-party testing, distribution or development contracts.

These agreements would also be part of the operation. Ownership of certain assets may trigger regulatory obligations of the owner. If the purchaser is concerned that the asset to be acquired will impose new regulatory requirements, he should require the current owner: other provisions of an asset purchase contract may be included: legal challenges to the ownership of the owner of the property to be sold must be thoroughly reviewed and analyzed.