Purchase Agreement
What It Means
A Purchase Agreement, sometimes called a definitive agreement, is a legal document that details the terms and conditions involved in the transfer of ownership in a company or its assets. There are two common form of Purchase Agreement depending on the type of transaction:
Asset Purchase Agreement - In an Asset Purchase Agreement, the Buyer acquires ownership of select assets of a company.
Stock Purchase Agreement - In a Stock Purchase Agreement, the Buyer acquires ownership of shares of equity in a company directly.
Why It’s Important
.Generally, Buyers prefer an Asset Purchase and Sellers prefer a Stock Purchase, but each type of purchase has its own set of advantages and disadvantages that should weigh in to the value of the overall acquisition structure.