I was interested to read the recent case of IX v IY  which considered the question...
Asset Sale and Purchase
Buying or selling a business by the purchase or sales of its assets can be a detail driven and complex process. At Birkett Long, our Commercial and Corporate Finance team can guide you through every stage of the sale/purchase: from negotiating and drafting heads of terms, carrying out legal due diligence, negotiating and drafting the key transaction documents to ensuring that the acquisition is completed successfully and in a timely manner.
When someone acquires a business by way of an asset purchase, they only acquire the assets and liabilities which the buyer and seller agree will be bought and sold. Despite whatever may be decided, the employment contracts of the employees of the company will automatically transfer to the buyer under the TUPE Regulations. There are a number of requirements set out by these regulations and our employment law solicitors can guide you through the process.
It is important to ensure that an extensive agreement, known as an asset purchase agreement, is drawn up, which sets out clearly all the terms of the sale and purchase. The terms should deal with (amongst other things):
- Which assets are to be purchased;
- Purchase price;
- How the purchase price is to be paid;
- Any warranties to be given;
- Limitations on the seller's potential liability for breach of any warranties;
- How income and outgoings before and after completion will be apportioned;
- What happens to outstanding debts still owing to the business at completion;
- The transfer of the employees under TUPE; and
- Any restrictions on the seller from competing with the business after the sale has completed.