The Share Purchase Agreement
Written by on 10 December 2011« Return to Reading Room
If you are considering a share purchase acquisition, it is the most important document in any purchase of a company.
The Share Purchase Agreement ( SPA) is usually a lengthy document - many hundreds of pages - it is also the key document for the sale and purchase of a company and it is put together by the purchaser's solicitor (traditionally, but this can sometimes change ie if the company is to be sold by auction). Much of the SPA will be devoted to warranties. Warranties are vital. The SPA will have a separate tax deed which will have its own tax warranties, and this will be added to the SPA by way of a schedule. Schedules are often used to include details such as pension arrangements, warranties, completion accounts etc.
As a buyer you are taking on the entire business history. It is essential that you are aware of the seller's history, its tax history, past and future liabilities, and "warts and all". The SPA must deal with all this and you cannot purchase a company without it.
It can be hugely stressful for both buyer and seller alike and good lawyers and accountants are essential. Build a team around you set a completion date and do the deal!
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