What is a Share Purchase Agreement

Solicitors refer to this document as the SPA. It is the main agreement which dictates how the shares in the target company will be acquired. It can be a lengthy and ponderous document. We have known many SPA agreements to run to over 100 pages. Much of the document will consist of warranties.

Who drafts the document?

Not always but usually and traditionally it is the Purchaser’s lawyers. It will include the following

  1. Warranties and indemnities
  2. How the purchase price will be met
  3. Restrictive Covenants
  4. Completion matters

Both parties will also need a disclosure letter and the deed of tax covenant ie tax deed. This deed is only relevant where shares are being acquired.

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