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Asset Purchase Agreement

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ESCROW AGREEMENT

1. The Parties:

SELLER

Address

City/County/State/Zip

BUYER

Address

City/County/State/Zip

Escrow Agent

Address

City/County/State/Zip

2. Purpose of Agreement. Simultaneously with the making of this Agreement, Seller and Purchaser have entered into a contract (the Contract) by which Seller will sell to Purchaser the following property:

The closing will take place on , at , at the offices of Escrow Agent or at such other time and place as Seller and Purchaser may jointly designate in writing.

Pursuant to the Contract, Purchaser must deposit $ as a down payment to be held in escrow by Escrow Agent.

3. Deposit of Escrow and Acknowledgment of Receipt. The down payment referred to hereinabove has been paid by Purchaser to Escrow Agent. Escrow Agent acknowledges receipt thereof from Purchaser by check, subject to collection.

4. Escrow Agent's Duties Upon Closing of Sale. If the closing takes place under the Contract, Escrow Agent at the time of closing shall pay the amount deposited with him to Seller or in accordance with Seller's written instructions. Escrow Agent shall make simultaneous transfer of the said property to the Purchaser.

5. Escrow Agent's Duties If Sale Does Not Close. If no closing takes place under the Contract, Escrow Agent shall continue to hold the amount deposited with him until he receives written authorization for its disposition signed by both Purchaser and Seller. If there is any dispute as to whom Escrow Agent is to deliver the amount deposited, Escrow Agent shall hold the sum until the parties' rights are finally determined in an appropriate action or proceeding or until a court orders Escrow Agent to deposit the down payment with it. If Escrow Agent does not receive a proper written authorization from Seller and Purchaser, or if an action or proceeding to determine Seller's and Purchaser's rights is not begun or diligently prosecuted, Escrow Agent is under no obligation to bring an action or proceeding to deposit the sum held by him in court, but may continue to hold the deposit.

6. Escrow Agent's Liability. Escrow Agent assumes no liability except that of a stake holder. Escrow Agent's duties are purely ministerial and are limited to those specifically set out in this Agreement. Escrow Agent shall incur no liability to anyone except for willful misconduct or gross negligence so long as Escrow Agent acts in good faith. Seller and Purchaser release Escrow Agent from any act done or omitted in good faith in the performance of Escrow Agent's duties.

7. Escrow Agent's Compensation. As full compensation for Escrow Agent's services, Escrow Agent shall be paid the sum of $ , together with any unreimbursed costs and expenses incurred by him in carrying out his duties. These sums shall become due when Escrow Agent fully discharges his duties and may be deducted from the amount deposited with Escrow Agent before delivery of the deposit in accordance with the terms of this Agreement.

SELLER

Date

PURCHASER

Date

ESCROW AGENT

Date

Enter text✕
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What an Asset Purchase Agreement Is and when it's used

An Asset Purchase Agreement (APA) is a legally binding contract that documents the transfer of specified assets from a seller to a buyer in a business sale. The APA identifies the assets being sold, purchase price and allocation, representations and warranties, indemnities, closing conditions, and post-closing obligations such as transition services or assignment of contracts. It distinguishes which liabilities remain with the seller and which transfer to the buyer, and it typically includes schedules listing tangible and intangible items. Parties often negotiate tax and regulatory provisions, and counsel review is advisable for complex transactions.

Why a clear APA protects both parties

A well-drafted APA clarifies which assets transfer, allocates purchase price for tax reporting, limits exposure through reps and indemnities, and establishes closing mechanics and conditions. Clear provisions reduce disputes, limit unexpected liabilities, and preserve post-closing remedies for both buyer and seller.

Why a clear APA protects both parties

Who typically prepares and signs an Asset Purchase Agreement

Buyers, sellers, corporate counsel, and transaction advisors use this agreement to document asset transfers, allocate risk, and satisfy regulatory and tax requirements.

  • Buyers — businesses or investors acquiring specified assets, assigned contracts, and intellectual property rights.
  • Sellers — companies divesting lines of business, equipment, inventory, or IP to a buyer.
  • Advisors and counsel — lawyers, accountants, and tax advisors drafting and reviewing transaction terms.

Ensure the persons involved have authority to bind their organization and that tax and legal advisors review allocation and indemnity provisions before signing.

Representative roles in the transaction

Buyer Representative

Typically the acquiring company's CFO or corporate development lead who negotiates purchase price allocation, reviews representations and warranties, coordinates due diligence, and obtains board or lender approvals. They ensure closing conditions are satisfied and that transferred assets are properly assigned.

Seller Representative

Commonly the owner, CEO, or divestiture manager responsible for disclosing assets, coordinating schedules, managing liabilities retained by seller, and assisting with transition services. They work with counsel to limit post-closing indemnity exposure and complete required consents.

Core sections to include in a professional Asset Purchase Agreement

A complete APA organizes the transaction around itemized asset schedules, purchase terms, representations and warranties, indemnities, closing conditions, and transition support to reduce post-closing disputes.

Asset Schedule

Attach detailed schedules listing tangible assets, inventory, equipment, contracts, intellectual property, and excluded items; accuracy reduces disputes and supports tax allocations and lender reviews.

Purchase Terms

Specify total consideration, payment timing, escrow provisions, earn-outs, and any seller financing; clear formulas prevent ambiguity in post-closing payment obligations and tax reporting.

Reps & Warranties

Seller statements about title, authority, compliance, tax matters, and accuracy of financials; disclaimers and survival periods manage risk allocation after closing.

Indemnities

Define indemnity triggers, baskets, caps, and survival periods; precise drafting limits unexpected liability and sets procedures for claims and defense.

Closing Conditions

List conditions precedent for both parties, required consents, regulatory approvals, and document deliverables to ensure a predictable and enforceable closing.

Transition Services

Outline any post-closing support, service level expectations, access to systems, and fees to ensure business continuity and smooth handover.

Step-by-step sequence to prepare and close the APA

Follow this step-by-step sequence to prepare, negotiate, and execute an Asset Purchase Agreement efficiently and reduce post-closing issues.

  • 01
    Identify Assets: List tangible and intangible items for transfer.
  • 02
    Due Diligence: Review financials, contracts, and liabilities.
  • 03
    Negotiate Terms: Agree price, reps, indemnities, and allocations.
  • 04
    Close & Transfer: Execute documents, obtain consents, and fund payment.

Digital workflow configuration for review and signature

Configure a signing workflow that enforces reviewer order, signer authentication, field conditions, and audit logging to create an admissible execution record.

Field Configuration
Signer Authentication Email plus SMS code for signer verification.
Conditional Fields Show asset schedule fields only when applicable.
Bulk Send Use bulk send for multiple similar transactions.
Audit Trail Enable timestamps, IP logging, and completion certificate.

How electronic execution typically proceeds

Digital execution shortens closing cycles by automating signing, consent collection, and delivery while preserving an auditable trail for each action.

  • Upload Document: Upload final APA to the signing platform.
  • Place Fields: Add signature, initial, and date fields for each party.
  • Invite Signers: Send email or link with authentication steps.
  • Complete & Archive: Capture audit trail and deliver signed copies to parties.

Technical considerations for eSigning and storage

For electronic signing, ensure the platform supports audit trails, secure authentication, and formats compatible with your records retention policy.

  • File Formats: PDF and DOCX accepted.
  • Integrations: Salesforce, NetSuite, Google Workspace supported.
  • Security: AES-256 at rest; TLS 1.2/1.3.

Comparing eSignature vendor pricing and capabilities for APAs

Compare common eSignature vendor pricing and critical features relevant to executing Asset Purchase Agreements, including HIPAA compliance and bulk send or envelope limitations.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes (BAA available) Yes Yes No No

Common preparation errors to avoid

  • Failing to list all intangible assets such as customer lists, trademarks, and software licenses, which creates post-closing ownership disputes and remediation costs.
  • Using vague consideration language like 'market value' without a numeric allocation that can cause tax controversies and valuation conflicts.
  • Not securing third-party consents for assignable contracts, leading to contract termination or breach claims after closing.
  • Overlooking employee transfer rules and benefits obligations, causing unexpected payroll liabilities or compliance issues under state employment laws.

Short risks and consequences of an incorrect APA

Tax Exposure: Misallocation can trigger IRS adjustments.
Liability Transfer: Unexpected liabilities shift to buyer.
Contract Assignment Failures: Third-party consents may be required.
Indemnity Gaps: Insufficient indemnities leave exposure.
Closing Delays: Unmet conditions postpone transfer.
Regulatory Noncompliance: Permits or licenses may lapse.

Essential data fields required in the agreement

Parties' Names: Full legal names of buyer and seller.
Asset List: Detailed list of tangible and intangible assets.
Purchase Price: Total amount and payment structure.
Allocation Schedule: Tax allocation among asset categories.
Reps & Warranties: Seller and buyer representations and warranties.
Closing Date: Effective date and payment timing.

Practical drafting and execution tips

Use targeted steps to reduce negotiation time and minimize post-closing disputes when preparing an Asset Purchase Agreement.

Engage tax and legal counsel early
Have a tax advisor review purchase price allocation and structure; accurate allocations prevent IRS adjustments and reduce the likelihood of costly post-closing tax disputes.
Prepare complete asset schedules
Inventory tangible and intangible items carefully, using serial numbers, contract identifiers, and IP registrations to avoid later ownership or valuation disagreements.
Obtain consents in advance
Identify contracts requiring assignment consent and secure approvals before closing to avoid breach or termination risks that could derail the transaction.
Define indemnity mechanics clearly
Specify baskets, caps, survival periods, notice procedures, and defense control to ensure predictable claim resolution and reduce litigation.

Frequently asked questions about Asset Purchase Agreements and electronic execution

Answers to common questions about using and validating Asset Purchase Agreements, electronic signatures, notary requirements, and post-signing corrections.


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