Share purchase agreements at paper rock docs

What are the main features of a Share Purchase Agreement?

The Share Purchase Agreement (SPA) is the principal legal document for a share purchase transaction.  Typically, the first draft of the SPA prepared by the buyer except in a competitive auction process, where the seller may provide a draft for review by competing bidders.

Depending on the negotiated deal terms, the main features of an SPA include:

• sale and purchase: details of the sale and purchase of the target company shares 
• closing: requirements for closing the transaction, including the payment of consideration and the signing of share transfers and other ancillary transaction documents 
• conditions: any conditions that need to be satisfied prior to closing
• consideration: the consideration to be paid by the buyer, including its form (cash, shares or a combination), upfront payment at closing, deferred consideration, earnout consideration and completion accounts adjustments 
• warranties: warranties from the seller about the target company’s business, finances, assets, intellectual property, contracts, liabilities and tax history
• indemnities: specific indemnities identified during due diligence and disclosure process and, typically, a tax indemnity for pre-closing tax liabilities and compliance
• restrictive covenants: covenants preventing the seller from competing with the target company and soliciting its customers, suppliers and employees for a specified period following closing