An asset purchase is a transaction in which a buyer acquires specific assets and liabilities of a business, rather than purchasing the entire company. This type of purchase allows the buyer to select which assets they want to acquire, often leading to a more tailored transaction.

Characteristics
– Selective Acquisition: Buyers can choose specific assets, such as equipment, inventory, or intellectual property, while leaving behind unwanted liabilities.
– Liability Management: The buyer typically does not assume the seller’s liabilities unless explicitly agreed upon.
– Tax Benefits: Buyers may benefit from a step-up in basis for the acquired assets, potentially leading to tax advantages.
– Complexity: Asset purchases can involve more detailed negotiations and documentation compared to stock purchases, as each asset must be identified and valued.

Examples
– A technology company may purchase the software and patents of a startup, while leaving behind its debts and other liabilities.
– A restaurant chain may acquire the kitchen equipment and lease agreements of a local diner, without taking on the diner’s outstanding loans or employee contracts.