An Asset Purchase Agreement (APA) is a legal document that finalizes all the terms related to the purchase and sale of a company’s assets. So, what is an asset? An asset is an item that is owned by a Company that has some value. These items can be tangible, such as machinery or vehicles, or intangible, such as vendor lists, data, or bank accounts. An APA is a flexible legal mechanism as it allows the Buyer to choose which assets and which liabilities it would like to assume. For example, a Buyer can choose to purchase the rights to use trademarks, the website, or social media profiles and specifically exclude certain contracts or liabilities from becoming a part of the deal.

A Stock Purchase Agreement (SPA) is a legal document whereby stocks of a Corporation are transferred from the Corporation to a purchaser for value. When the deal is finalized, the seller will transfer the stock certificates to the buyer and the buyer pays the price according to the agreement as consideration for the stocks. A Stock Purchase Agreement can be a little riskier than an Asset Purchase Agreement as you may not be one hundred percent certain of what you are purchasing. This agreement lays out in detail the terms of the deal including representations and warranties, number, and price of shares, when the stocks will be transferred and so much more.

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