deal-structures
An asset purchase agreement is the definitive contract for buying specified assets and assuming specified liabilities of a business, rather than buying the company’s shares.
An asset purchase agreement defines the business as a list: tangible assets, IP, contracts, inventory, receivables (sometimes), permits (if transferable), and goodwill. It also lists excluded assets and the liabilities the buyer will assume. Everything else stays with the seller. That is the commercial attraction, and the administrative cost.
IFRS 3 still applies if the buyer is acquiring a business rather than a pile of isolated assets. Tax allocation of the price among asset classes — often a negotiated exhibit — drives future depreciation and can be as fought-over as the headline number.
Contracts often need counterparty consent to assign. Licences may not transfer. Employees may transfer automatically under local rules (for example TUPE-style regimes in Europe), bringing obligations the APA cannot wish away. Legal due diligence on assignability is therefore existential, not tidy-up.
Price €9m allocated (illustration) €2m to equipment, €1m to inventory, €3m to customer contracts/goodwill, €3m to IP. Two customers refuse assignment; the parties carve those contracts into a delayed closing. VAT on the transfer depends on whether the deal qualifies as a transfer of a going concern in that jurisdiction.
Buyers like APAs when the selling entity is dirty or when a tax step-up matters. Sellers like share deals for a clean break and, in many systems, more favourable capital-gains treatment. Groups selling a division often have no choice: there is no standalone share to sell, so the APA is the deal.
An incomplete asset list. Purchase-price allocation that the tax authorities will not respect. Ignoring successor-liability case law. Treating the APA as a shorter SPA.
You cannot asset-purchase your way out of every liability. Competition, employment and consumer law sometimes follow the business anyway.
An APA is a structured inventory plus a price. If the company’s contracts, IP and people are already objects in a smart data room, the schedules are extracted rather than invented. The practitioner shorthand is APA.