While you can modify a SPA model, the advantage of involving corporate lawyers in the design and negotiation of the share purchase contract is that they can help ensure that they reflect a fair and commercial distribution of the risk of the transaction between the buyer and the seller. With a lawyer, you can also protect yourself from the discoveries and painful debts of resale. Some buyers may only be interested in acquiring exclusive ownership of a business. If the target is made up of several shareholders, some may not want to sell their shares. In this case, the drag-along right may be helpful. It allows majority shareholders to force the minority shareholder to sell – or “pull” its shares. However, this sale must be made under the same (financial) conditions as those offered to the majority shareholder. All consents that shareholders must obtain before finalization, all consents that the company must obtain before completion. All consents that the entity must obtain or authorizations or licenses that expire as a result of the change of ownership of the business. All agreements to which the company is a member and which include a change in the control provisions. All brokerage and/or research agreements.
In essence, due diligence is the process by which the purchaser of the target shares examines the company`s activities, key people, documents and assets. The procedure is intended to draw the buyer`s attention to the risks that may be associated with the purchase of the target shares, but also to justify the value of the investment or acquisition price. A third, and just as important, value of due diligence is to determine all necessary consents before the shares can be transferred (i.e. banks, lenders or commercial contracts). A share purchase agreement is defined as a legal contract between a seller and a buyer. They can be called sellers and buyers in the contract. The specific number of shares is shown in the contract at the stated price. This agreement proves that the sale and the terms of the sale were agreed upon by mutual agreement. As a general rule, THE SPAs are signed, the purchase price is paid and the shares are transferred on the same day. There may sometimes be delays between the exchange and the conclusion of the agreement, especially when the preconditions for sale must be met.