Buying or selling business assets involves more than agreeing on a price. The contract must identify exactly what changes hands, what remains behind, and who bears the risks discovered after closing. A Houston asset purchase agreement lawyer can structure the transaction, conduct due diligence, negotiate practical protections, and prepare the documents needed to close with confidence.
The Curley Law Firm assists Houston-area buyers and sellers with carefully tailored asset purchase agreements. Attorney Adam Curley draws on experience in private practice, in-house leadership, mergers and acquisitions, and business ownership to address both the legal terms and the commercial realities of a transaction.
What Is an Asset Purchase Agreement?
An asset purchase agreement, commonly called an APA, is a contract through which a buyer acquires selected assets from a business. Those assets may include:
- Equipment, inventory, and supplies;
- Customer and vendor contracts;
- Trademarks, copyrights, domain names, and other intellectual property;
- Accounts receivable;
- Licenses and permits that may be transferred;
- Real estate or leasehold interests;
- Customer lists and business records;
- Trade secrets and operational knowledge; and
- Goodwill and the right to use the business name.
Unlike an equity purchase, an asset acquisition generally does not transfer ownership of the seller’s corporation or limited liability company. The seller continues to own the entity, while the buyer acquires the assets listed in the agreement and assumes only the specified obligations, subject to applicable law.
That distinction can help a buyer limit exposure, but an APA is not a guarantee against every prior liability. Tax rules, employment obligations, liens, contractual provisions, and successor-liability principles may still affect the buyer. An experienced asset purchase agreement attorney can identify these concerns before the buyer commits its money.
Why Use an Asset Purchase Instead of an Equity Purchase?
Buyers often favor asset purchases because they can select the property and rights they want without purchasing the entire legal entity. A buyer may acquire inventory, equipment, contracts, intellectual property, and goodwill while leaving certain debts or disputed obligations with the seller.
Sellers may prefer an equity sale because the entire entity changes ownership, potentially allowing contracts, permits, and business relationships to continue with less disruption. Tax consequences can also differ significantly between the two structures.
The right structure depends on factors such as:
- The types of assets being acquired,
- Known and potential liabilities,
- Required third-party consents,
- The tax treatment of the purchase price,
- Financing requirements,
- The seller’s plans after closing, and
- Whether important licenses are transferable.
The transaction should be structured before the parties become locked into a letter of intent. A lawyer for asset purchase agreement negotiations can help evaluate these issues early and coordinate with the parties’ accountants and other advisors.
How Does a Houston Asset Purchase Agreement Lawyer Protect a Transaction?
An APA should do more than record the purchase price. It should create a clear plan to transfer the business assets from the seller to the buyer while allocating risk between the parties.
Define Purchased and Excluded Assets
Broad descriptions such as “all business assets” can create uncertainty. The agreement should identify the purchased assets in detail, frequently through attached schedules. It should also state what the seller retains, such as cash, specified receivables, personal property, insurance rights, or tax refunds.
Contracts require special attention. Many commercial agreements contain anti-assignment or change-of-control provisions. A contract listed as a purchased asset may have little value if the other party must consent but refuses.
Separate Assumed and Excluded Liabilities
The APA should expressly identify the liabilities the buyer agrees to assume. These might include obligations arising under assigned contracts after closing, specified customer deposits, or certain accrued employee benefits.
Excluded liabilities may include pre-closing taxes, existing litigation, prior employee claims, unpaid vendor balances, or obligations arising from products sold before closing. The agreement should coordinate these provisions with indemnification rights, escrow arrangements, and any negotiated liability caps
Address the Purchase Price and Adjustments
The contract should state how and when the purchase price will be paid. Depending on the deal, payment may include cash at closing, financing proceeds, a promissory note, an earnout, or funds held in escrow.
Working-capital adjustments, inventory counts, prorated expenses, accounts receivable, and assumed obligations can change the final amount. The agreement should provide an objective method for calculating and a procedure for resolving disputes.
Allocate the Purchase Price for Tax Purposes
In a qualifying asset acquisition, federal law generally requires the buyer and seller to allocate the consideration among asset classes using the residual method. The parties may also have to report the allocation to the IRS on Form 8594. Both sides should understand that allocating more value to goodwill, equipment, inventory, or restrictive covenants may produce different tax results.
The APA should require consistent reporting, while leaving tax advice and calculations to the parties’ qualified tax professionals.
Due Diligence Before Signing or Closing
A well-drafted contract cannot replace careful investigation. Before closing, a buyer should evaluate the financial, legal, and operational conditions of the assets and business.
Due diligence may cover:
- Financial statements and tax returns,
- Accounts receivable and payable,
- UCC financing statements and other liens,
- Ownership of intellectual property,
- Material customer and supplier contracts,
- Real estate leases,
- Employment and independent-contractor arrangements,
- Pending or threatened claims,
- Regulatory licenses and permits,
- Insurance policies and claim history, and
- Cybersecurity and data-privacy practices.
A Houston business purchase agreement lawyer can connect due diligence findings to the
contract. If an important customer agreement cannot be assigned, for example, the buyer may require consent as a condition to closing. If equipment is subject to a lien, the agreement can require a payoff letter and lien release.
How Can Texas Tax Liability Follow an Asset Sale?
Texas buyers should pay particular attention to unpaid state taxes. In Texas, a purchaser may be required to withhold enough of the purchase price to cover taxes owed by the seller.
The Texas Comptroller’s guidance for buying an existing business warns that a purchaser who closes without appropriate protection may become liable for past-due state taxes, penalties, and interest, up to the purchase price. The buyer and seller can jointly request a Certificate of No Tax Due before closing. The Comptroller states that processing may take up to 90 days if an audit is required, underscoring the importance of early planning.
An indemnity from the seller can be useful, but it may not help if the seller has no funds remaining after closing. Tax clearance, withholding, and escrow provisions provide more immediate protection.
What Are Representations, Warranties, and Indemnification?
Representations and warranties establish facts on which the parties rely. A seller may represent that it owns the assets, has authority to sell them, has disclosed litigation, and has not granted undisclosed liens. A buyer may make representations concerning its authority and ability to complete the purchase.
The parties must also negotiate what happens if a statement proves inaccurate. Indemnification terms may address:
- Which losses are recoverable,
- How long claims may be brought,
- Deductibles or baskets,
- Maximum liability caps,
- Claims excluded from a cap,
- Defense of third-party claims, and
- Escrow or holdback remedies.
These terms should reflect the specific risks revealed during diligence rather than being copied from an unrelated transaction.
Approvals, Closing Conditions, and Transfer Documents
The parties’ governing documents and Texas law may require internal authorization. For example, the law generally requires board and shareholder approval when a Texas corporation sells all or substantially all of its assets outside the ordinary course of business.
The APA should identify every condition that must be satisfied before closing, including financing, landlord approval, contract consents, lien releases, and delivery of corporate resolutions. Separate closing documents may include a bill of sale, an assignment and assumption agreement, intellectual property assignments, deeds, lease assignments, promissory notes, and restrictive covenant agreements.
Speak with a Houston Asset Purchase Agreement Lawyer
An asset purchase can shape a business owner’s financial future for years. The terms should reflect the actual deal, allocate known risks, and provide workable remedies if problems arise.
Adam Curley has served as general counsel, director of legal, M&A counsel, private-practice attorney, and business owner. That varied experience allows The Curley Law Firm to approach acquisitions with a practical understanding of what clients need before, during, and after closing.
If you need an asset purchase agreement lawyer in Houston, contact The Curley Law Firm. A Houston asset purchase agreement lawyer can help you evaluate the proposed structure, perform legal due diligence, negotiate the APA, and move toward closing with clearer expectations and stronger protection.
Legal References Used to Inform This Page
To ensure the accuracy and clarity of this page, we referenced official legal resources during the content development process: