Share Purchase Agreement: group conditional
Conditional Share Purchase Agreement for the purchase of a group of companies from a single seller
Background
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.
The first draft SPA is usually prepared by the buyer. An exception is in the case of a competitive auction process, where the seller may provide a draft SPA for review and comment by the competing bidders for the company.
The main features of an SPA are:
- sale and purchase: the mechanics for the sale and purchase of the target company shares and closing of the transaction
- conditions: any conditions that need to be satisfied prior to closing
- consideration: the consideration to be paid by the buyer, including the form of consideration (cash, shares or a combination), upfront consideration paid on closing, deferred consideration, earnout consideration and adjustment for the net assets of the target company on the business of completion accounts
- warranties: warranties from the seller about the target company, its business, finances, assets, intellectual property, contracts, liabilities and tax history
- indemnities: any specific indemnities identified during the due diligence and disclosure process and, usually, a tax indemnity relating to pre-closing tax liabilities and compliance
- restrictive covenants: covenants prohibiting the seller from competing with the target company and soliciting the target company’s customers, suppliers and employees for a period following closing of the transaction
About this Share Purchase Agreement: group conditional
This Share Purchase Agreement is for the purchase of a group of companies from a single seller.
The document is suitable for a transaction on the following terms:
-
- signature of the agreement with completion of the acquisition being subject to the satisfaction of one or more closing conditions
- payment of the entire consideration in cash at completion
Document features
Features include:
- full-form SPA with 24 clauses and 5 schedules over 39 pages
- process for the sale and purchase of shares and completion deliverables
- closing of the transaction being subject to the satisfaction of one or more closing conditions
- obligations of the seller relating to the conduct of the business of the group companies prior to closing
- warranties from the seller relating to the target group
- seller limitations from liability under the warranties
- provision for indemnities for specific issues
- restrictive covenants from the seller
- tax covenant for pre-completion tax liabilities
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