A Share Purchase Agreement (SPA) is a crucial document in the sale and purchase of shares in a company. Here are the key elements that should be covered:
Parties: Clearly identify the buyer(s) and seller(s) involved in the transaction.
Recitals: Provide background information and the purpose of the agreement.
Definitions: Define key terms used throughout the agreement to avoid ambiguity.
Sale and Purchase of Shares: Specify the number and type of shares being sold, including any conditions attached to the shares.
Purchase Price: Detail the purchase price, including how it is calculated, payment terms, and any adjustments (e.g., for working capital or debt).
Conditions Precedent: Outline any conditions that must be satisfied before the transaction can be completed, such as regulatory approvals, consents, or due diligence.
Warranties and Representations: Include warranties and representations from both parties, covering aspects such as the seller’s ownership of shares, the financial condition of the company, and the accuracy of information provided.
Covenants: Set out any covenants or undertakings by the buyer and seller, such as restrictions on certain actions before closing or obligations to support the business post-closing.
Indemnities: Define indemnification provisions for breaches of warranties or representations, including the scope, limitations, and duration of indemnities.
Closing: Detail the closing procedure, including the date, place, and actions to be taken at closing, such as the transfer of shares, payment of the purchase price, and delivery of relevant documents.
Post-Closing Obligations: Specify any actions required after closing, such as the transition of management, continued cooperation, or further assurances.
Confidentiality: Include confidentiality obligations regarding the terms of the agreement and any proprietary information disclosed.
Non-Compete and Non-Solicitation: If applicable, set restrictions on the seller’s ability to compete with the company or solicit its employees or customers for a specified period.
Dispute Resolution: Establish the method for resolving disputes, such as mediation, arbitration, or litigation, including the governing law and jurisdiction.
Notices: Provide the procedures for giving notices between parties, including addresses and acceptable methods of communication.
Termination: Specify the conditions under which the agreement can be terminated, including mutual consent, failure to meet conditions precedent, or breaches by either party.
Miscellaneous Provisions: Include standard clauses such as entire agreement, amendments, assignment, severability, and counterparts.
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