An asset purchase agreement is a contract in which a buyer (person or entity) agrees to purchase assets from the seller (a person or entity) for a stated price. Asset purchase agreements are usually used when one business wants to purchase some but not all of the assets of another business, and when the buyer might be concerned about taking on liabilities associated with the selling company. These are a couple of ways in which an asset purchase agreement is different from a merger agreement in which two or more companies merge to create a new combined organization, or an acquisition agreement in which the buying company acquires the selling company in its entirety.

In Illinois, an asset purchase agreement (APA) is a legal document that outlines the terms and conditions under which one party, the buyer, agrees to purchase specific assets from another party, the seller. Unlike a merger or acquisition agreement, an APA typically involves the transfer of selected assets and may exclude certain liabilities, allowing the buyer to avoid inheriting the seller's debts and obligations. The APA will detail the assets being sold, the purchase price, representations and warranties, conditions to closing, and other pertinent terms. It is crucial for both parties to clearly define which assets and liabilities are included in the sale to prevent future disputes. Illinois law requires that certain formalities be observed in the execution of an APA, such as proper authorization by the selling entity's board of directors and compliance with the Uniform Commercial Code for the sale of certain types of assets. Additionally, depending on the nature of the assets and the structure of the deal, state and federal tax implications, as well as regulatory approvals, may need to be considered.