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What is an asset purchase in business?

On Behalf of | Apr 12, 2023 | Business Transactions |

Businesses involve many transactions, one of them being purchasing assets. When your business gets to a good place, you can acquire assets from another business. You won’t be purchasing the whole company or its stocks, just the assets.

This post discusses this matter:

What is a business asset?

An asset is anything valuable to a business. It can be tangible, such as vehicles, equipment, building, land and inventory. It can also be intangible, such as goodwill, intellectual property and brand recognition.  

What factors should you consider?

An asset purchase is a crucial move for a business. Thus, you need to be careful with every step you take. First, you should do due diligence on the company you want to work with. They should provide you with accounting books or documentation of the assets to obtain more information. 

Further, you need to know the accurate value of the assets you want to purchase. The other party will also do valuation, as they want to determine the selling price. Nonetheless, you should hire an appraiser to know when a price is unreasonably high. 

Another factor to consider is how you will finance the purchase. You can purchase with the profits from your business or get loans from a bank and other reliable lenders. Your loved ones (family and friends) may also contribute toward the purchase.

Do you need an asset purchase agreement?

An asset purchase agreement can significantly protect you. Undoubtedly, you researched the company and the assets to purchase, but issues may arise in the future. A contract ensures both parties are safe.

If you are planning to acquire an asset(s) from another business, it can help to get legal help to make the right moves.