5 Common Mistakes in Asset Purchase Agreements (and How to Avoid Them with Empire Business Law)

1. Failing to Clearly Define Transferred Assets and Liabilities

Why It Happens

Many parties enter into asset purchase agreements without listing each asset and liability in detail. Vague or generalized language might seem sufficient in the moment, but it opens the door to major misunderstandings later.

What Can Go Wrong

If it’s not clearly defined, it’s not guaranteed to transfer. The buyer might assume they’re purchasing key equipment, trademarks, or contracts—only to find they weren’t legally included. The seller might think they’re off the hook for certain liabilities, but the vague wording says otherwise. This can lead to:

• Post-sale litigation
• Loss of operational continuity
• Confusion over ownership rights

How to Avoid It

A well-drafted asset purchase agreement should include:

• A detailed schedule of included assets (inventory, equipment, IP, etc.)
• A clear breakdown of excluded assets
• An itemized list of assumed vs. retained liabilities

Empire Business Law ensures nothing is left to interpretation. Our legal team works closely with clients to define every asset and obligation—so there’s no confusion after closing.

2. Ignoring Tax Structuring Early in the Process

Why It Happens

In the rush to close the deal, tax considerations are often left until the last minute—or skipped altogether. Buyers and sellers may not realize how dramatically taxes can affect the value of the transaction.

What Can Go Wrong

Without tax planning:

• Sellers may face double taxation (e.g., corporate taxes and individual capital gains)
• Buyers may lose depreciation benefits or miss opportunities for tax deductions
• Misallocated purchase prices can trigger IRS scrutiny

How to Avoid It

Tax treatment depends on how assets are categorized and how the transaction is structured. This includes:

• Section 1060 allocation of purchase price
• Treatment of goodwill, inventory, and receivables
• Entity type of buyer/seller (LLC, S-corp, etc.)

At Empire Business Law, we collaborate with tax professionals to structure transactions in a way that minimizes tax burdens and maximizes net proceeds. We build tax strategy into your APA from day one—not as an afterthought.

3. Overlooking Contract Assignments and Permits

Why It Happens

Not every agreement, license, or permit transfers automatically in an asset purchase. Yet many buyers assume operational continuity will remain intact after closing.

What Can Go Wrong

If a key vendor contract or business license isn’t assigned:

• The buyer may lose access to essential supply chains or facilities
• Certain business activities may become illegal or suspended
• The entire value of the purchase may be compromised

For example, many software, franchise, or lease agreements contain anti-assignment clauses. Government permits may also be non-transferable, requiring new applications and approvals.

How to Avoid It

Every material agreement must be:

• Reviewed for assignability
• Identified in the asset purchase agreement
• Renegotiated or replaced if necessary

Empire Business Law conducts deep due diligence on all third-party contracts and regulatory licenses. We make sure your transaction includes all the legal steps to preserve value and ensure business continuity from day one.

4. Relying on Generic Templates or DIY Agreements

Why It Happens

Online legal templates are easily accessible and seem budget-friendly. Business owners often believe they can handle the agreement themselves with minimal customization.

What Can Go Wrong

While templates might look professional, they rarely:

• Address jurisdiction-specific laws (especially in states like California or New Jersey)
• Include detailed clauses on indemnity, breach remedies, or escrow
• Contain buyer/seller-specific protections tailored to the business type

This DIY approach leads to:

• Unenforceable clauses
• Missed liability protections
• Unclear terms that create room for disputes

How to Avoid It

Asset purchase agreements must be customized to the industry, structure, and goals of the transaction. At Empire Business Law, we don’t use templates—we build airtight contracts based on years of hands-on experience and industry best practices. Our agreements are drafted, reviewed, and negotiated with one goal: to protect your interests fully.

5. Skipping Proper Legal Review from Both Sides

Why It Happens

Sometimes parties want to “keep things simple” and agree not to involve lawyers. Or, one party hires a lawyer, but the other doesn’t. This is especially common in friendly or family-run deals.

What Can Go Wrong

When only one side has legal representation, or when no lawyer reviews the deal, you risk:

• Lopsided terms that unfairly favor one party
• Unnoticed red flags in the agreement
• Inadequate enforcement or breach remedies post-sale

Even worse, courts may view the lack of legal review as a sign of negligence if a dispute arises later.

How to Avoid It

Each party should have its own legal counsel to ensure balanced, enforceable terms.

Empire Business Law can represent either buyers or sellers, and we routinely coordinate with opposing counsel to negotiate clear, fair agreements that protect everyone’s interests.

Why You Need More Than Just a Document

The truth is, an asset purchase agreement is only as good as the people drafting and negotiating it. No two deals are the same—and trying to copy-paste terms from another business or a free online template can create legal vulnerabilities you won’t spot until it’s too late.

Empire Business Law helps businesses in California, New Jersey, and beyond close smarter, safer deals. We take into account the full context of your transaction—industry, deal structure, tax exposure, future plans—and we guide you through every detail with clarity and confidence.

Bonus: Questions to Ask Before Signing Any Asset Purchase Agreement

Before you finalize any deal, ask:

• Are all assets clearly listed and valued?
• What liabilities am I assuming or excluding?
• Are third-party consents needed for contracts or licenses?
• How is the purchase price allocated for tax purposes?
• What are the remedies if one party breaches the agreement?
• Have both parties had the agreement reviewed by legal counsel?

If any of these questions make you hesitate, you need to consult a business attorney. And not just any attorney—one who understands how asset purchases work in the real world.

That’s where Empire Business Law comes in.

The Empire Business Law Advantage

Working with Empire Business Law means working with a firm that’s deeply focused on your long-term success. We don’t just draft documents—we develop legal strategies that protect your future.

Here’s what sets us apart:

• We tailor every agreement to your unique transaction
• We work across industries and company sizes
• We focus on risk mitigation and operational clarity
• We offer transparent, value-based pricing
• We handle both sides of transactions: buyers and sellers

Whether you're acquiring a business or selling one, we ensure every clause is vetted, every risk is addressed, and every asset is properly transferred.

Let’s Get Your Deal Done Right

If you’re preparing to buy or sell business assets, don’t leave the legal details to chance. A poorly written asset purchase agreement can unravel your transaction—or haunt you for years.

Instead, partner with a law firm that has the experience, precision, and foresight to protect your investment.

📞 Schedule your free consultation with Empire Business Law and let us guide your transaction with confidence and clarity.