Asset Purchase Agreement Term Sheet Template for Australia

When you're buying or selling business assets in Australia, an Asset Purchase Agreement Term Sheet serves as the foundation for your transaction. This preliminary document captures the key commercial terms and conditions before you commit to the lengthy process of drafting a comprehensive asset purchase agreement. Unlike the final binding agreement, the term sheet typically remains non-binding except for specific provisions such as confidentiality, exclusivity, and legal costs.

When do you need this document?

You'll need an Asset Purchase Agreement Term Sheet when you've reached preliminary agreement on the main commercial terms but aren't ready to proceed with detailed legal documentation. This occurs most commonly when you're acquiring specific business assets rather than purchasing shares in a company. The term sheet is particularly valuable in complex transactions involving multiple asset categories, where clarity on scope, pricing, and conditions is essential before investing in expensive due diligence processes. It's also crucial when you need to secure financing or regulatory approvals, as lenders and regulators often require evidence of agreed commercial terms before proceeding with their assessments.

Key legal considerations

Your term sheet must clearly identify which assets are included and excluded from the sale, including tangible assets, intellectual property, contracts, and goodwill. Payment structure is critical—you need to specify not just the total purchase price but also deposit amounts, completion payments, and any deferred consideration or earn-out provisions. Conditions precedent should be carefully defined, covering due diligence outcomes, financing arrangements, regulatory approvals, and third-party consents. The document should also address key risks including employee transfers, warranty provisions, indemnity arrangements, and completion mechanics. Consider including break fees or deposit forfeiture clauses if either party withdraws without proper cause.

Legal requirements in Australia

Under the Corporations Act 2001, certain asset purchases may trigger disclosure obligations if the buyer or seller is a public company. You must consider the Personal Property Securities Act 2009 requirements for registering security interests over personal property being transferred. The Competition and Consumer Act 2010 may require notification to the Australian Competition and Consumer Commission for substantial acquisitions. If foreign buyers are involved, the Foreign Acquisitions and Takeovers Act 1975 may mandate approval from the Foreign Investment Review Board. Tax implications under the Income Tax Assessment Act 1997 should be addressed, particularly regarding capital gains tax and GST obligations. State-based requirements may also apply depending on the nature and location of assets being transferred.