In an asset sale, the buyer purchases specified assets of the target business rather than 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 others remain with the seller.
This structure lets the buyer define precisely what it is acquiring. The catch, easy to miss in an asset deal, is that selecting liabilities does not eliminate every risk. Certain liabilities may follow the assets by law, and the purchase agreement’s indemnification provisions remain important.