Sale & Purchase Agreements
The sale and purchase agreement is the result of sophisticated key commercial pricing negotiations and is the key document in many sales processes. A sale and purchase agreement (SPA) is a legal contract that obligates a buyer to buy and a seller to sell a product or service. A SPA is a structure that outlines how a transaction shall progress; detailing exactly what is and is not included in the transaction.
Often associated with property they are also frequently used in business, detailing the transfer of ownership, rights and shares. It may also define restrictive covenant, preventing the seller from opening a new company that will be in direct competition with the company sold therefore devaluing the business.
This restrictive covenant will prevent the seller from contacting existing clients, customers and suppliers. These restrictions can be set for a specific geographic area and time period.
Upon purchasing a company the new owner will inherit all liabilities automatically. The seller is required to provide warranties regarding the condition of the company at the point of sale. Should these statements turn out to be false then the seller will have breached the warranty and the buyer may then be able to make a claim.
To mitigate the risks involved in this, the buyer will ask the seller to give certain warranties as to the liabilities and condition of the company, if any specific risks have been identified, to then provide specific indemnities.
An indemnity is a promise to reimburse the claimant in respect of loss suffered by the claimant.
The SPA is a very important piece of documentation for a business owner and must be created thoroughly and carefully under the advice of a specialist legal team.
Our SPA team understands our client’s needs for practical commercial advice regarding SPA’s. We will endeavour to advise you and protect your position throughout the deal process.
Contact us today if you require further assistance with your sale and purchase agreements.