Share Purchase Agreements

If you need solicitors for a share purchase transaction, whether you are investing into a limited company or buying or selling the entire share capital of a business, we’re an ideal choice.

When it comes to share purchases, we’ve got vast experience advising businesses of all sizes and types. That experience means we focus quickly on the issues and strike the right balance between proportionate legal fees, speed and getting the right deal and protections in place for clients.

What to include in a share purchase agreement

Each transaction is different. Negotiation is a key aspect where good, experienced lawyers can assist in advising. The final agreement is the last stage in a process where pre-contract enquiries and due diligence are key.

General speaking, below are key issues and clauses to consider and include in a share purchase agreement :-

• Warranties – the seller will generally try to avoid giving warranties which are statements of fact with legal implications. A typical warranty might apply to the accounts being accurate or stating that the seller is unaware of any matter which could lead to a legal dispute.
• Indemnities – these clauses, if included, will be very specific about certain situations where the seller would have to take legal responsibility and are strong legal protection for a buyer.
• Payment terms – it is not unusual for part of an agreed purchase price to be deferred, there may be an Earn Out mechanism included.
• Restrictive covenants – often will require that for a set period of time the seller will remain working in the business and may not work for a competitor or set up a competitive business.

Ancillary documents for an SPA

With a share purchase transaction, either as part of the main agreement and sometimes referred to in it but separate, will be other key documents and necessary practicalities post completion. These typically include :-

• Tax indemnity;
• Disclosure letter – ties in with warranties;
• Change of ownership with related contracts – do existing contracts with customers have Change Control provisions which may entitle the customers to cancel if the business changes owners?

Variables with Share Purchase Agreements

The most common form of share purchase agreement is where the sellers sell the entire business to an external buyer.

However, there are variations such as a Management Buy Out situation or where a controlling interest is bought rather than the entire share capital. In these situations there will be additional important documents other than the share purchase agreement. For example, a new shareholders agreement will be important and there will be considerations relating to control, dividends, exit and other key issues.

Get in touch to discuss how our specialist, experienced solicitors can help with your share purchase agreement. Our fees are competitive whether it’s drafting, reviewing or advising on the underlying transaction.