The share purchase agreement is often abbreviated to “SPA”. For the avoiding doubt, please note that the generic term “sales contract” is sometimes also abbreviated to SPA. The concept of a sales contract is usually as follows: as a rule, it is the seller who designs the first share purchase contract. They upload the design towards the end of the second round to the virtual data room. This follows several back and forth between lawyers for both sides. A sales contract (SPA) is a legally binding contract between two parties that has entered into a transaction between a buyer and a seller. SPAs are typically used for real estate transactions, but are found in all industries. The agreement concludes the terms of the sale and is the culmination of negotiations between the buyer and seller. The share purchase agreement is a legal document defining the conditions under which the shares are transferred to a company. It distinguishes between a transfer of all the shares in a company and a partial transfer. There are at least two parties to this agreement: a selling company holding the ownership rights to the shares and a buying company. As a rule, shares are transferred against payment in cash.

But it is also possible to pay for equity with shares, benefits in kind or media. A second area of risk is the result of an assessment that can be carried out when the target is capital intensive. A buyer can reduce the purchase price on a dollar-to-dollar basis if the value of the assets being valued is less than the expectations used in their valuation models. A seller is better able to order their own evaluation in advance or, at the very least, to ensure that the expert used is qualified and independent. The expert will often indicate two values: the ordered liquidation value (OLV) and the fair value (FMV). Fair value is the relevant value if the transaction is maintained. Most of the problems found during due diligence can be mitigated or compensated through the share purchase agreement. However, they must be disclosed in due diligence, identified by the buyer and treated appropriately in the SPA. This analysis is an important step that precedes the organization of the share purchase agreement.

While ongoing actions could result in high fines for the buyer, change of control clauses in supplier and customer contracts could pose a threat to the company`s turnover. . . .