Asset Purchases · New Jersey
Asset Purchase Agreements Drafted Around What Is Really Changing Hands
In an asset deal, the agreement is the inventory: anything not listed may not transfer, and any liability not excluded may follow you. The firm drafts and negotiates asset purchase agreements for New Jersey buyers and sellers.
The document
What an asset purchase agreement does
An asset purchase agreement (APA) transfers selected assets of a business — equipment, inventory, contracts, names, phone numbers, goodwill — from the seller's entity to the buyer, while the seller's entity and its unassumed liabilities stay behind.
That selectivity is the reason most small and mid-sized acquisitions in New Jersey are structured as asset purchases. It is also why the drafting is detailed. The buyer gets only what is identified, so the schedules have to be complete; and the buyer avoids only the liabilities the agreement excludes, so that clause has to be drafted with care.
As part of the firm's buying and selling businesses practice, Paul H. Appel prepares buyer-side first drafts, marks up seller drafts, and negotiates the final terms directly with the other side. For how this structure compares with buying the company's shares, see asset purchase vs. stock purchase.
Inside the agreement
The provisions that need the most attention
Every APA covers price and closing. These are the parts that most often decide whether the deal works afterward.
Purchased assets schedule
A specific list of what transfers: equipment by serial number where practical, inventory, receivables if included, assigned contracts, permits that can be transferred, trade names, websites, phone numbers and customer lists.
Excluded assets
Cash, the seller's tax refunds, personal vehicles, certain bank accounts and anything else the seller keeps. Clear exclusions avoid arguments at closing.
Assumed and excluded liabilities
The buyer usually assumes only listed obligations — often post-closing performance under assigned contracts. Everything else, including pre-closing taxes, debts and claims, should be expressly excluded and remain the seller's.
Purchase price allocation
How the price is divided among asset classes affects both parties' taxes. Buyer and seller generally report the allocation to the IRS on Form 8594, so agreeing on it in the APA avoids inconsistent filings. Your accountant should drive the numbers.
Contract assignments and consents
Leases, supplier agreements and customer contracts may require consent to assign. The APA should say what happens if a consent is not obtained by closing.
Representations and indemnity
Even in an asset deal, the buyer needs promises about title, condition, compliance and the accuracy of financial information, with a practical way to recover if they prove untrue.
A New Jersey requirement
The bulk sale notice belongs in the timeline
When a buyer acquires a New Jersey business's assets outside the ordinary course of business, the buyer must notify the NJ Division of Taxation — using Form C-9600 — at least ten business days before closing. If the notice is not filed, the buyer risks becoming liable for the seller's unpaid state taxes.
After the notice, the Division may tell the buyer to withhold part of the price in escrow until the seller's tax position is cleared. A well-drafted APA anticipates this: it makes the filing a pre-closing step, allows for a tax escrow if the Division requires one, and states how it will be released.
Details of the filing and related tax coordination are covered on the firm's page about bulk sale tax clearance.
Ancillary documents
What usually signs alongside the APA
The agreement is the centrepiece, but an asset closing needs a set of supporting instruments. A typical package includes:
- Bill of sale transferring the tangible assets
- Assignment and assumption agreement for contracts the buyer takes over
- Intellectual property assignment for trade names, domains, software and content
- Lease assignment with landlord consent, or a new lease
- Restrictive covenant agreement from the selling owners
- Transition or consulting agreement if the seller will help after closing
- Seller promissory note and security agreement, where the seller is financing part of the price
- Resolutions or consents approving the sale on both sides
Not every deal needs every document, and some deals need others — for example, transfers of licenses or vehicle titles.
Engagement
How an APA engagement runs
Review the deal terms
You share the letter of intent, broker materials and whatever the other side has proposed. The firm confirms the scope in writing with the fee before work begins.
Build the schedules
Working from diligence and the seller's records, the firm assembles the asset, contract and liability schedules that give the agreement its substance.
Draft and negotiate
Paul drafts or marks up the APA and ancillary documents and negotiates the open points with opposing counsel.
Close
Consents, the bulk sale filing, payoff letters for any liens on the assets, and signature pages are coordinated so the closing happens on the agreed date.
Questions & answers
Asset purchase agreements — questions clients ask
What should an asset purchase agreement include?
At its core: a precise list of purchased and excluded assets, a clear statement of which liabilities the buyer assumes and which stay with the seller, the price and how it is paid and allocated, representations and indemnities, closing conditions, and the restrictive covenants and transition terms. The schedules are as important as the body of the agreement.
Who prepares the first draft of the asset purchase agreement?
It is negotiable and often settled in the letter of intent. In many small business sales the buyer's counsel drafts, because the buyer carries more of the risk the document addresses. Whoever drafts controls the starting framework, which is a real advantage, so it is worth raising early.
Do I have to file a bulk sale notice when buying assets in NJ?
If you are buying a New Jersey business's assets outside the ordinary course of business, the buyer is required to notify the Division of Taxation at least ten business days before closing on Form C-9600. Skipping the notice can make the buyer responsible for the seller's unpaid state taxes, so treat it as a firm deadline in the closing timeline.
Why does purchase price allocation matter?
Different asset classes are taxed differently, so how the price is split among equipment, inventory, goodwill, non-compete payments and other categories changes each side's tax result. Buyer and seller usually report the allocation consistently to the IRS. The firm documents the agreed allocation in the APA; your accountant should advise on the figures.
Your attorney
Paul H. Appel, Esq.
Every matter at the firm is handled personally by Paul — the same attorney reads the documents, gives the advice and negotiates on your behalf.
- Education
- Columbia Law School, Juris Doctor (1967)
- Experience
- 58+ years in commercial and business law
- Focus for this matter
- Business acquisitions, sales, due diligence and closing documents
- Office
- Freehold, NJ — serving Monmouth, Middlesex & Ocean Counties
Contact
Discuss Your Business Matter With Paul
Describe what the business is dealing with — a contract on your desk, a deal in progress, a dispute or a company you are about to form. You will hear back from the attorney who handles the work.
- Phone917-748-6124
- Office11 Crestwood Drive, Freehold, NJ 07728
- ConsultationsBy phone, video or in person by appointment
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