It goes without saying that any provision must be carefully tailored to the specifics of each party and each agreement. If you are involved in an acquisition, you must ensure that the sales contract protects your rights in an appropriate and targeted manner, minimizes your liability and risk, and allows you to back off in the event of an infringement. Although there are many types of acquisition transactions, a deal usually includes one of the two main types of acquisition contracts – a business acquisition contract or an asset buyback contract. Depending on the circumstances, companies may also seek a merger, not an acquisition. Asset Purchase Agreement – In this type of agreement, the buyer buys all or part of the company`s assets. These assets may include financial accounts, tangible assets, including equipment, real estate and inventories, as well as intangible assets such as trade secrets, patents, copyrights or trademarks. The owners retain ownership of the hull of the business, even if there is no longer any practical activity. This can be advantageous when a company acquires an individual business or a partnership without a formal entity. The oil and gas industry does not distinguish between an asset and the purchase of shares when it designates its corresponding sales contract. In this sector, whether it is the purchase of assets or shares, the final agreement is called the Purchase and Sale Contract (PSA).
Enterprise Purchase Contracts – This type of agreement, also known as share purchase agreements, oversees an acquisition by which the buyer obtains ownership by purchasing at least a large portion of the company`s shares. Once they are majority owners, the beneficiary company takes control of the business, including the company`s obligations and debts. An asset repurchase agreement (APA) is an agreement between a buyer and a seller that concludes the terms and conditions for the purchase and sale of a company`s assets.   It is important to note in an APA transaction that it is not necessary for the buyer to purchase all of the company`s assets. Indeed, it is customary for a buyer to exclude certain assets in an APA. The provisions of an APA may include payment of the purchase price, monthly payments, pawn and asset charges, closing condition, etc.  An APA is different from a share purchase agreement (SPA) in which business shares are also sold, ownership of assets and ownership of liabilities.  In an APA, the buyer must choose certain assets and avoid redundant assets. These facilities are broken down according to an APA schedule. The buyer in a SPA buys shares in the company. In this case, there is no need to revalue the transfer of ownership of the company.
The APA is the legal mechanism for merging or acquiring businesses.  Although each acquisition is different from another, there are several important provisions that should always be included in the agreement.