At the heart of the BSG is the agreement that the seller sells the shares of the target company and that the buyer buys. Normally, the seller agrees to sell the shares “with a full security guarantee” – this special clause has the effect that the seller directly owns the shares, that he has the right to sell them, that he does whatever is necessary to make the transfer to the buyer, and that the shares are not subject to third-party rights or restrictions. In the case of a sale of shares between two parties, a spa project is usually established by the buyer`s legal representatives, as it is the buyer who is most concerned that the BSG protects them from debt after the sale. When a business is auctioned, the seller`s lawyers usually prepare a proposed share purchase contract and make it available to interested bidders for consideration. After negotiating the terms of the OSG and the due diligence process, the parties each sign the SPA, the buyer pays the purchase price and the shares are formally transferred to the buyer via a transfer form. Generally, this takes place on the same day. The execution of the SPA and completion (when the shares are transferred) is often done, but not always, at the same time. The SPA should describe in detail what happens, for example, at completion: the final sale price of the shares may be flexible, depending on the performance of the target company after the sale. If this is the case, a number of financial statement accounts will be established to show the actual value of the business at the point of sale. In this way, the share price can be adjusted if the transaction does not go as planned. A spa should indicate the sale price of the shares, the currency paid, the schedule and all other conditions such as the staggered payment related to the company`s delivery. As a general rule, payment is made in cash, although the buyer can sometimes offer the seller some of his own shares or issue credit vouchers to the seller. This will require the involvement of a lawyer.
This information is provided in a “disclosure letter” that will be negotiated and delivered after closing, which will help eliminate any unknown issues of the buyer that could affect the purchase price or purchase decision. A share purchase agreement is probably long and consists of a main document and different calendars or annexes containing specific information and details of the transaction. While a SPA can be in any format, the following are the most important clauses, and those that should ideally be designed by an experienced legal expert. Since a share purchase agreement is a private transaction, it generally contains provisions limiting the flow of confidential information and preventing the buyer and seller from disclosing the details of the agreement to third parties.