Asset Purchase Agreements in SaaS and Ecommerce Acquisitions

The most important document in a SaaS or Ecommerce acquisition is the Asset Purchase Agreement (“APA”). Everyone will look first at the purchase price since that is the number that is the headline, but many of the other terms are just as important and merit careful attention.

The first thing the APA will do is detail all of the assets being transferred. For ease of reading, the list of assets will usually be contained in a schedule or exhibit to the main agreement. Both parties should expect this list to be extensive and for some of the listed items to overlap. This is done in order to make sure that all of the relevant assets are transferred. In addition to a schedule containing the assets being transferred, there can also be a separate schedule of assets that are not being transferred. This schedule is especially important if the seller operates more than one SaaS or Ecommerce business—the seller needs to make clear that nothing related to those other businesses is being purchased.

The purchase price and payment terms will come next. The purchase price will be straightforward, but the payment terms can vary greatly between deals. There can be all cash up front, payments over time, earn-out payments based on milestones after the sale, and many combinations of those possibilities. There can also be a provision to adjust the purchase price based on inventory or accounts receivable at the closing, which can be especially important in Ecommerce acquisitions. Since it is impossible to know exactly what the inventory will be at closing, it is common to adjust the final purchase price after inventories can be audited following the closing.

The APA will describe the closing process in minute detail. There will be an escrow agent to facilitate the transaction and there will be an inspection period. This is when the buyer can review the assets being transferred (while both the assets and the money are still in escrow) to make sure that everything the buyer thinks it is acquiring is actually there. How long this period is and the process for resolving any discrepancy are important terms that both buyers and sellers should understand.

Following these are warrants and representations. The buyer and seller will have separate sections here, but the basic purpose of these sections is to represent that the parties have the authority to enter into the transaction, there are no tax liens on the assets, and there is no lawsuit that will prevent the transaction from occurring. There will be others, and the seller will make more warrants and representations than the buyer. Make sure you review these provisions with your attorney so that you can actually make them and minimize future litigation risk.

After the warrants and representations, there will be a series of additional covenants. The most important of these is a covenant by the seller not to compete with the business being sold for a period of time (should that be part of the deal). Buyers will want the period of time to longer and sellers will want it to be shorter, but even more important can be defining the scope of the non-compete provision. This language should be carefully worded so that it is enforceable, sufficient to protect the buyer, and not crippling to the seller.

​The final significant term in a standard SaaS or Ecommerce APA is the indemnification section. There may be some things that aren’t perfect when the assets are transferred. This section lays out the process for the buyer to recover against the seller should that be the case. It is important to focus on definitions here, as this section can look like an insurance contract. There will probably also be a minimum amount for a single claim to be valid under the APA and maybe a minimum cumulative amount before the buyer will be able to seek indemnification under the agreement. This is different than in larger commercial transactions where a portion of the purchase price will be set aside for indemnification and adjustments to the purchase price. Since many SaaS and Ecommerce transactions are smaller, this additional complication is uncommon but will become more likely as the value of the transaction increases.

​If you are buying or selling an online business, we will gladly guide you through the process to a successful transaction. Reach out to us at and we will schedule a meeting to discuss your goals and how to achieve them efficiently.

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