Asset Sale Agreements
Business & Commercial
Newcastle Business Lawyers For Your Asset Sale Agreements
Selling an asset to a purchaser can take many different forms. The asset may be tangible, like a photocopier, or intangible like the intellectual property of the business. An important notion to consider is that an asset sale is distinct from a business sale, you could sell all your assets but retain the business itself. The team at Burgess Thomson can assist you to ensure that the asset sale is documented correctly and is reflective of the agreement between you and the purchaser.
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What is the process of selling an asset?
Generally, asset sales involve you listing one or more specific items for sale, and an interested purchaser reaching out to you with an interest in purchasing. After the interest is established, they may seek to negotiate certain details regarding the sale. Say you are selling 5 photocopiers for $2,000.00, the purchaser may offer you $1,200.00 for 4 photocopiers. You may seek to negotiate the price, number of assets included in the sale or other terms of the agreement.
Other considerations at this stage include providing warranties regarding the condition of the asset or providing evidence that the asset is free from debts or claims. Therefore, you may have to provide additional documentation to evidence the state of the assets.
How do I formalise the agreement?
Once the parties have negotiated the key terms of the agreement, generally a Heads of Agreement will be prepared. One important aspect of the Heads of Agreement to note is whether this agreement is binding or not. This will be reflected in the language of the agreement.
After the Heads of Agreement is prepared the next step is for a lawyer to draft a binding agreement in the form of a Contract for sale. As the Contract is binding, it is important that your lawyer explain the terms to you, so you understand any obligations or responsibilities imposed on you by the agreement.
Will there be tax involved in selling an asset?
It is best to consult an accountant regarding the tax implications of your sale. But it is important to be aware that the sale may have tax implications for you, such as capital gains tax.
What is a distressed asset sale?
This is where you sell an asset at lower than market value to obtain cash quickly. This may be considered by persons operating businesses who have a deadline to pay a debt coming up and need to liquidate an asset to have the funds available to pay it.