There are two ways to transfer a business to new owners: a share transfer or a capital transfer. Some key differences are: An asset transfer agreement, also known as the Asset Purchase Agreement, Transfer of Assets Agreement, Memorandum of Transfer Property, is an agreement that concludes the terms of the purchase and sale of assets of a business. In the case of an asset sale, the company`s assets are transferred to a new owner without the actual ownership of the business being transferred. Instead of acquiring all the shares of a company, and therefore both its assets and liabilities, a buyer very often prefers to take over only certain assets of a company. As a general rule, in the event of an asset acquisition, the company will sell the assets itself, while in the event of a share sale, the individual shareholders will be the sellers. In general, capital transfer agreements have a clause that talks about what action to take when a party to the agreement violates the terms of the above agreement. A compromise clause is present in most agreements and stipulates that if a clause of the agreement is violated or if a dispute arises with respect to the terms of the agreement, the matter will be settled by arbitration. The clause mentions where the arbitration will take place, that is, the seat of arbitration, the language in which the proceedings are conducted and the manner in which arbitrators are appointed. In addition, there may be important contracts that are not transferable or some licenses and authorizations may be clear to the seller. Sometimes a buyer wants to get as many customer relationships as possible, so he can choose to buy shares as opposed to assets.
Business sale agreements, sometimes called asset sale agreements, are applied when a company`s activities (assets and businesses) are sold and not the shares of the company. A share sale contract should be applied when a business is sold. If you need a template for a simple asset transfer agreement, you can download an asset transfer model here. Where there are liabilities that the purchaser does not collect in the purchase, the parties must ensure that the purchase is not less than the fair value of the assets and that the entity remains sufficiently capitalized after the sale to settle its debts and liabilities. Otherwise, the transaction may be considered fraudulent. We are very experienced in selling businesses and assets – please call us. Otherwise, any other form of dispute resolution, such as mediation, can be mentioned in the agreement. The agreement must clearly specify which assets will be transferred.
Assets transferred under a capital agreement may include investments and machinery, inventory, contracts, premises, know-how and goodwill. In the event of an asset purchase, the buyer may choose only certain assets and leave redundant assets. Therefore, the selected facilities must be broken down according to a schedule of the agreement. When a contract is considered fundamental to the business when buying assets, the purchaser may insist that the closing of the asset sale be conditional on the renewal of the contract.