Website Asset Purchase Agreement (APA) Guide
The Asset Purchase Agreement is the legally binding contract that closes every website acquisition. Unlike the LOI (which is largely non-binding), the APA is the document that matters, it defines exactly what transfers, what the seller warrants about the business, and what happens if something goes wrong after closing. This guide walks through every major clause so you can review, negotiate, or draft one with confidence. See also: due diligence guide, acquisition checklist, escrow guide, website transfer guide.
What is an Asset Purchase Agreement?
An Asset Purchase Agreement (APA) is the binding contract in which a buyer purchases specific assets from a seller, rather than buying the seller's legal entity. In website acquisitions, this almost always means buying the domain, website files, brand IP, traffic, revenue contracts, social accounts, and customer/subscriber lists, not buying the seller's LLC or corporation.
The APA is distinct from an entity purchase, in which the buyer acquires the entire legal entity (including its liabilities). Most website acquisitions use asset purchase structure because it lets the buyer cherry-pick the assets they want while leaving behind any undisclosed liabilities in the seller's entity.
The APA is signed after due diligence is complete and the LOI has been agreed. It is the final gate before funds are wired and assets transfer.
8 steps to execute a website APA
- 1
Complete due diligence before drafting
The APA should reflect reality, not aspirations. Finish all due diligence, revenue verification, traffic audit, legal review, technical inspection, before a word of the APA is drafted. Issues discovered in due diligence become either negotiated representations or price adjustments in the agreement. Drafting before due diligence is complete almost always requires a costly re-draft.
- 2
Define the complete asset schedule
The Schedule of Acquired Assets must exhaustively list every asset transferring to the buyer: the domain name and all subdomains, hosting accounts, website files and databases, social media accounts, email list and ESP account, affiliate and ad network accounts, trademarks and brand IP, source code repositories, software licenses, and any physical assets. Anything omitted from the schedule is not legally part of the deal.
- 3
Draft seller representations and warranties
Representations are the seller's contractual assurances about the business. Key reps in a website APA: revenue figures are accurate; there are no undisclosed legal proceedings; the seller has full authority to sell; there are no liens on the assets; the site has no Google penalties or manual actions; all ad and affiliate accounts are in good standing and transferable; the seller is the sole IP owner.
- 4
Negotiate the purchase price allocation
For tax purposes, both parties must allocate the purchase price across asset classes (goodwill, IP, equipment). For website acquisitions, the allocation typically falls heavily on goodwill and IP. Buyers benefit from allocating more to depreciable assets (Section 197 amortization over 15 years); sellers generally prefer goodwill allocations taxed at long-term capital gains rates. Both parties file IRS Form 8594 and the allocations must match.
- 5
Include non-compete and non-solicitation clauses
A non-compete prevents the seller from recreating a competing site in the same niche for 2-5 years. Without one, the seller could immediately rebuild the same asset. For content sites, specify the topic categories and key keywords in scope. For SaaS, specify the feature set and customer segment. A non-solicitation clause prevents poaching customers, contractors, or employees.
- 6
Structure indemnification and escrow holdback
Indemnification defines what happens if the seller's representations prove false post-closing. Set the cap (typically 10-30% of purchase price), the survival period (typically 12-24 months), and a basket/deductible (minimum claim threshold). An escrow holdback (5-15% of price held for 3-12 months) provides practical security, claims offset the holdback before it releases to the seller.
- 7
Define the transition period obligations
Specify how long the seller will support the buyer post-closing (typically 30-90 days), what they are obligated to do (answer questions, assist with transfers, introduce contractors), how many hours per week, and whether the seller is compensated. For SaaS, specify what technical documentation must be delivered and in what format.
- 8
Execute via escrow and fund simultaneously
Both parties sign the APA via DocuSign or equivalent, then the buyer funds escrow. The seller initiates all asset transfers (domain, hosting, social, ad accounts, email list). Once the buyer confirms receipt of every asset in the schedule, they release escrow. Do not release escrow before confirming control of all assets.
Key APA clauses at a glance
| Clause | What it covers | Binding? |
|---|---|---|
| Asset schedule | Exhaustive list of every asset transferring to the buyer | Yes |
| Purchase price | Total consideration and payment structure (cash, seller note, earnout) | Yes |
| Purchase price allocation | How purchase price is divided across asset classes for tax filing | Yes |
| Representations & warranties | Seller's assurances about revenue, traffic, ownership, and legal status | Yes |
| Non-compete clause | Prevents seller from recreating competing site for 2-5 years | Yes |
| Non-solicitation clause | Prevents seller from poaching customers, staff, or contractors | Yes |
| Indemnification | Buyer's recourse if seller representations prove false post-close | Yes |
| Escrow holdback | Portion of price retained in escrow as security for post-close claims | Yes |
| Transition period | Seller's post-close support obligations, duration, hours, deliverables | Yes |
| Closing conditions | What must happen before the deal is considered closed | Yes |
| IP assignment | Formal transfer of all IP rights, domain, code, brand, content | Yes |
| Governing law | Which state's law governs disputes | Yes |
6 common website APA mistakes
- 1
Incomplete asset schedule
If a social media account, email list, or affiliate account is not listed in the schedule, the seller is not legally obligated to transfer it. List every asset by name and URL, do not use general language like 'all related social accounts.'
- 2
Vague revenue representations
Representations like 'revenue is approximately $X per month' are almost unenforceable. Specify the exact trailing-twelve-month revenue figure, the revenue sources, and the time period covered by the representation.
- 3
No survival period on representations
Representations that expire at closing give the buyer zero protection. Set an explicit survival period (12-24 months) after which claims for misrepresentation are time-barred.
- 4
Missing non-compete scope
A non-compete that says 'cannot start a competing website' is too vague. Specify the niche, key topic categories, and geographic scope. Courts regularly void overbroad non-competes, if the scope is clear and reasonable, it is more likely to be enforceable.
- 5
Releasing escrow before confirming all asset transfers
Some buyers feel social pressure to release escrow quickly after signing. Only release funds after you have confirmed control of the domain, hosting, all social and ad accounts, the email list, and any source code repositories. Partial transfers are not completed transfers.
- 6
No transition period provisions
An APA that closes without defining the seller's post-close obligations leaves the buyer without recourse if the seller becomes unresponsive. Specify the number of hours per week, the duration, and what constitutes adequate support, or structure a portion of the purchase price as a transition payment.
Common APA questions
- Do I need a lawyer to draft or review a website APA?
- For deals under $25,000, most buyers and sellers use a template APA without a lawyer, since the financial risk is relatively low. For any deal above $50,000, especially those involving seller financing, earnouts, SaaS source code transfers, or large customer lists, having a lawyer review the APA is strongly recommended. The APA is legally binding once signed, and poorly drafted provisions around representations, indemnification, or asset schedules can expose buyers to hidden liabilities or sellers to clawback claims. A lawyer reviewing a website APA typically costs $500-$2,000, small relative to the deal size.
- What is the difference between an APA and an LOI?
- A Letter of Intent (LOI) is a non-binding summary of agreed headline terms, price, structure, and exclusivity period, that kicks off due diligence. An Asset Purchase Agreement (APA) is the binding legal contract that actually closes the deal. The APA is drafted after due diligence is complete, incorporates all negotiated terms, and is signed by both parties before (or simultaneously with) escrow funding. The LOI tells you what you think you agreed to; the APA is what you actually agreed to. Any material term you want enforced must be in the APA, verbal agreements do not survive in a dispute.
- What happens if a seller breaches the APA representations after closing?
- If the seller made false representations in the APA, for example, claiming no pending legal claims, misrepresenting revenue figures, or not disclosing a Google manual action, the buyer has grounds for an indemnification claim. The buyer can recover losses up to the indemnification cap (typically 10-30% of the purchase price) during the survival period (typically 12-24 months post-closing). If an escrow holdback was structured, the buyer can offset claims against the holdback before it is released. For larger claims, litigation or arbitration may be necessary. This is why thorough due diligence is the first defense, indemnification claims are expensive and time-consuming to pursue.
- Can I transfer all assets without an APA?
- Technically, a website can change hands without a formal APA, especially for small deals under $5,000 where buyer and seller simply use Escrow.com and agree via email. However, without an APA you have no seller representations, no non-compete protection, no indemnification, no agreed asset list, and no warranty on IP ownership. For any deal above $10,000, the risk of proceeding without an APA outweighs the convenience. At minimum, use a short-form APA that covers the asset list, purchase price, IP assignment, non-compete, and representations about revenue and ownership.
Related guides
- →Letter of Intent (LOI) Guide
- →Website Due Diligence Guide
- →Website Acquisition Checklist
- →Website Escrow Guide
- →Website Transfer Guide
- →Acquisition Financing Guide
- →Website Negotiation Guide
- →Website Acquisition Tax Guide
- →Tax & Legal Considerations FAQ
- →Confidentiality & NDA FAQ
- →APA Glossary Definition
- →Non-Compete Clause Definition
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