top of page
Search

A 2025 Guide for UK Small Business Owners: Avoid These Common Mistakes in an Asset Purchase Agreement

Selling a small business in the UK is a significant step—and getting the legal paperwork right is essential. One of the most important documents you’ll need is an Asset Purchase Agreement. But many small business owners unknowingly make costly mistakes when drafting or signing one.


In this 2025 guide, we highlight the most common errors made when using an Asset Purchase Agreement and how to avoid them with affordable legal advice and expert-drafted documentation.


What is an Asset Purchase Agreement?

An Asset Purchase Agreement is a legal contract between a buyer and a seller that outlines the terms under which business assets are transferred. Unlike a share sale, where the buyer takes over the company itself, an Asset Purchase Agreement allows the buyer to purchase selected assets—such as equipment, inventory, goodwill, employees and contracts—without inheriting liabilities they don’t want.



7 most common mistakes in an asset purchase agreement transaction

Lets dive into each of these separately in a little more depth.


  1. Not Clearly Identifying the Assets Being Sold


One of the most frequent issues in an Asset Purchase Agreement is a vague or incomplete list of the assets being transferred. This can cause disputes over what was or wasn’t included. Be specific. Clearly list all assets in a schedule to the agreement—this might include equipment, stock, business names, domain names, customer data, or leasehold interests. Exclude anything the buyer is not purchasing.


  1. Overlooking TUPE regulations for employees

If your business has staff, the Transfer of Undertakings (Protection of Employment) Regulations 2006—known as TUPE—may apply. This means the employees will transfer to the buyer automatically, and their rights must be preserved.


If TUPE applies, your Asset Purchase Agreement must reflect this. Provide accurate employee liability information and comply with the consultation requirements to avoid tribunal claims.


  1. Failing to deal with liabilities properly


Sellers often assume that selling the business assets means they’re no longer responsible for outstanding liabilities. Unfortunately, without clear drafting, this may not be the case.

Ensure your Asset Purchase Agreement clearly defines who will take responsibility for which liabilities—such as supplier contracts, rent, and unpaid tax. You may remain liable for any debts not explicitly transferred.


  1. Not assigning contracts and licences


Contracts with customers, landlords, or software providers often require consent before they can be transferred. Ignoring this can leave the buyer unable to operate the business effectively.

Review all third-party contracts and licences before signing the Asset Purchase Agreement. Obtain written consent for assignments or novations where required.


  1. Using generic or poorly drafted agreements


Many business owners rely on free online templates that are not tailored to UK law, don’t reflect the commercial reality of the deal, or leave out key protections.


Use a professionally drafted Asset Purchase Agreement built specifically for UK small businesses. Legal Answers Pro offers online document generation backed by experienced legal professionals—so you get the right protection at an affordable price. You can access Legal Answers Pro asset purchase agreement generator at:



  1. Unbalanced warranties and indemnities


Buyers typically require warranties from the seller—promises about the condition of the business or its assets. But if not worded carefully, these can create long-term liability risks for the seller.


Negotiate fair, balanced warranties and include limitations on liability in your Asset Purchase Agreement, such as time limits and financial caps.


  1. Delaying legal advice until it is too late


Many small business owners only seek legal help once issues arise—or skip it altogether. This can lead to disputes, warranty claims, compliance issues, or even a failed sale.


Get affordable legal advice early. At Legal Answers Pro, we offer clear guidance and legally sound Asset Purchase Agreements for a fraction of traditional solicitor fees.


An Asset Purchase Agreement is more than just paperwork—it’s your legal protection during and after the sale of your business. By avoiding the mistakes above and getting the right legal support, you can ensure a smooth, secure transaction.


At Legal Answers Pro, we help UK small business owners create professional Asset Purchase Agreements online, with instant access to affordable legal advice. Whether you're selling a shop, salon, franchise, or service business, our templates are tailored to suit your needs—without the high cost of a law firm.



Legal Answers Pro owl logo

 
 
bottom of page