Share purchase agreement and deal closing

The letter of intent already shapes the negotiation

When a client calls us with the letter of intent already signed, much of the ground has been settled: exclusivity, the price mechanism, the timetable and sometimes even the allocation of liability. That is why we prefer to come in earlier. We review what is binding and what is not, how long exclusivity lasts, how confidentiality over the information about to be handed over is handled, and what happens if due diligence turns up something material. It is a short document with long consequences.

What is being bought: shares or assets

Buying shares means buying the whole company with its history: its contracts and permits stay with the same legal entity, and so do its liabilities and contingencies, known and unknown. Buying assets or a going concern lets you choose what comes across, but it requires assigning contracts, obtaining consents and dealing with the rules on the transfer of a going concern and their effect on creditors. The decision is taken looking at the corporate, employment and tax angles at once, which is why we run it together with our tax practice.

The clauses that decide the outcome

• Price and adjustments. Fixed price or adjustment for working capital or net debt, the calculation mechanism, who prepares the figures and how a disagreement is resolved.
• Deferred payments and escrow. Holdbacks tied to identified contingencies, earn-outs and release dates.
• Representations and warranties. The inventory of the seller's statements about the company, the exceptions disclosed and the moment at which they are deemed given.
• Indemnity. What it covers, with what cap, from what minimum amount, how long each warranty survives and how a claim is made.
• Conditions precedent. Third party consents, change of control approvals, outstanding remediation and, where applicable, the filing before the Superintendence of Industry and Commerce.
• Conduct between signing and closing. What the seller may and may not do in that interval with a business it still runs.
• Non-compete and non-solicitation. Defensible scope, duration and territory, both for the seller and in relation to key personnel.
• Governing law and disputes. Forum, arbitration and notice rules, settled before there is any conflict.

When we act for the seller

The interest reverses and so does the work. The scope of the representations and warranties is narrowed, reasonable caps and survival periods are negotiated, careful disclosure is made of what is already known, and the actual collection of the deferred price is protected. Preparing the company and the file before opening the process is usually worth more than any single clause.

Closing and what follows

Closing is not a signature: it is a sequence. We coordinate the verification of the conditions, the simultaneous signing of the documents, payment, entry in the share register, the appointments, handover of the corporate books and the notices to banks, customers and authorities. After closing we support the execution of the contract: claims under the warranties, release of holdbacks and the final price adjustment.

What the client receives

• The agreement negotiated and signed, with a plain-language explanation of what each clause protects and what it does not.
• The letter of intent and the confidentiality and exclusivity agreements from the earlier stage.
• The closing conditions list with owners and dates, tracked down to the last item.
• The complete closing file: signed documents, registrations, minutes and appointments.
• A summary of the obligations that remain live after closing and the date each of them falls due.

Typical situations we handle

• One partner buys out the other and needs the price, the payment terms and the exit tied together in a single document.
• A trade buyer acquires a company and the due diligence turns up contingencies that have to be allocated before signing.
• A fund or investor takes a minority stake and requires exit, veto and information rights in the same agreement.
• A family sells the business and its main concern is securing actual collection of the deferred price.
• The buyer has already signed and discovers that a consent or a change of control approval was missing before closing.