ASSET PURCHASE Meaning and
Definition
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An asset purchase refers to a transaction or agreement whereby one party (the buyer or acquirer) purchases the physical or intangible assets of another party (the seller or target company). These assets may include tangible items like equipment, inventory, real estate, or intellectual property rights, such as patents, copyrights, or trademarks. The sale may encompass all of the assets owned by the target company or only a specific subset, as specified in the purchase agreement.
In an asset purchase, the buyer gains ownership and control of the acquired assets, assuming any associated liabilities, while the seller receives compensation for the assets sold. It is a common form of acquisition where a company can selectively acquire assets without taking on the entire business's obligations or liabilities. This type of transaction allows the buyer to exclude undesirable parts of the business, like debts or legal obligations, and only acquire the assets that align with their strategic goals.
Asset purchases are prevalent in various business contexts, including mergers and acquisitions, bankruptcy proceedings, or when an individual or entity wishes to expand their operations or enter new markets. The terms and conditions of asset purchases are typically outlined in a purchase agreement, which may include details regarding price, payment terms, warranties, indemnification, and any specific terms concerning the transferred assets.
Etymology of ASSET PURCHASE
The word "asset purchase" does not have a specific etymology as it is a compound term derived from two separate words: "asset" and "purchase".
The word "asset" comes from the Old French term "asetz" meaning "enough, sufficient" and later evolved into "assett" in Middle English, which referred to property or possessions. It ultimately comes from the Latin word "ad satis", which means "to sufficiency" or "to satisfaction".
The word "purchase" has its roots in the Old French term "purchacier" meaning "to seek to obtain", derived from the Latin word "purchasare" or "procurare". It later evolved into "purchasen" in Middle English, which means "to acquire or obtain".
When combined, "asset purchase" refers to the act of acquiring or obtaining property or possessions.
