Acquired assets: Overview, definition, and example
What are acquired assets?
Acquired assets refer to assets that a company, organization, or individual gains through various means, such as purchasing, mergers, or acquisitions. These assets can include tangible items like real estate, equipment, or inventory, as well as intangible assets such as intellectual property, patents, or brand names. Acquired assets are typically added to the balance sheet of the acquiring entity and contribute to its overall value and operations.
For example, when a company purchases another company, the assets of the acquired company—such as machinery, trademarks, and customer lists—become acquired assets of the purchasing company.
Why are acquired assets important?
Acquired assets are important because they represent the resources and value that a company gains through acquisitions, helping to expand its operations, increase revenue potential, or gain competitive advantages. These assets can enhance the acquiring company’s market position, product offerings, and operational capacity. Properly managing and valuing acquired assets is crucial for integrating them successfully into the company's structure and maximizing their benefits.
For businesses, acquiring assets can lead to increased productivity, expanded market reach, and improved financial standing. It also provides a way to diversify and strengthen the company’s portfolio.
Understanding acquired assets through an example
Imagine a technology company, TechCorp, that acquires a smaller company, InnovateCo, to expand its product line. As part of the acquisition, TechCorp gains InnovateCo’s intellectual property, including patents for innovative software, as well as its office equipment and customer contracts. These assets—such as the patents, equipment, and contracts—are now considered acquired assets for TechCorp, and they will be integrated into TechCorp’s existing operations.
In another example, a large retail chain acquires a competitor's store network. The acquired assets in this case would include the store locations, inventory, brand name, and customer relationships, which can then be leveraged to increase the acquirer’s market share.
Example of acquired assets clause
Here’s how an acquired assets clause might appear in an acquisition agreement:
“The Purchaser shall acquire all assets of the Seller, including but not limited to real estate, intellectual property, equipment, inventory, and customer contracts, as outlined in Exhibit A. The Purchaser agrees to assume responsibility for all acquired assets as of the closing date, and any liabilities associated with these assets shall be transferred to the Purchaser.”
Conclusion
Acquired assets are essential for a company’s growth and expansion, as they represent the tangible and intangible resources gained through purchases, mergers, or acquisitions. Properly managing acquired assets is key to unlocking their full potential and ensuring the success of the acquisition. Whether in terms of physical property, intellectual property, or operational capabilities, acquired assets enhance a company’s competitive edge, financial health, and market position.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.