In an asset sale, the buyer purchases specified assets of the target business rather than acquiring the legal entity itself. The acquired assets might include inventory, equipment, intellectual property, customer relationships, and selected contracts. The buyer also agrees to assume certain liabilities, while other liabilities remain with the seller.
This structure allows the buyer to define precisely what it is acquiring. That can reduce exposure to unwanted obligations, although it does not eliminate every risk. Certain liabilities may follow the assets by law, and the purchase agreement’s indemnification provisions remain important.