Share purchase agreements

Once the parties agree on a price, the share purchase agreement can look like paperwork. It is where the deal is actually made. It decides what the buyer is paying for, what the seller promises about the company, and what happens when one of those promises proves wrong months after closing. A seller who signs without reading the limits of liability, or a buyer who relies on a vague warranty, finds out at the worst possible moment.

The agreement has to hold up long after the deal is done, when the people who negotiated it may have moved on. It covers the price, the promises and the period between signing and closing:

• the rules on how the price is fixed, whether by reference to a locked-box date or by accounts drawn up at closing;
• the rules on earn-outs, and on protecting the seller while the buyer runs the business;
• the rules on the warranties the seller gives, and on the disclosures that qualify them;
• the rules on specific indemnities for risks the buyer already knows about;
• the rules on limiting the seller’s liability — caps, minimum claims and the period in which a claim may be brought;
• the rules on how the business is run between signing and closing, and on the events that let either side walk away;
• the rules on escrow, holding back part of the price and insuring the warranties;
• the rules on settling disagreements over the closing accounts through an independent expert.

Our lawyers can support you with this.