Share Purchase Agreements
Our commercial property solicitors deal with all aspects of share purchase agreements (SPAs). Whether you need advice, you want a solicitor to draft an agreement, or you want to negotiate the terms, we can help. We act for both buyers and sellers of commercial property.
For a free quote, call us on 0191 567 7244 and we’ll be happy to help you.
What is a share purchase agreement UK?
A share purchase agreement sets out the terms and conditions attached to the sale of a company’s shares. The company may sell all or some of its shares. The effect is that total or partial control is handed over to a new owner.
Share purchase agreement vs asset purchase agreement
Those buying and selling a business (or part of a business) can do so via a share purchase or an asset purchase. While a share purchase involves buying the shares of a company, an asset purchase involves buying tangible and intangible assets.
We deal with both asset purchase agreements and share purchase agreements. Each option has its own benefits and limitations. An asset purchase allows for greater control over what is included in the sale. However, it may incur more tax liabilities, and may not include the transfer of third party contracts. A share purchase allows continuity of business, but approval may be needed from each selling shareholder.
There is no right or wrong way of acquiring a business – it depends on the circumstances. Our commercial property solicitors can advise you further.
Is a share purchase agreement legally binding?
A share purchase agreement is legally binding once it is signed by both parties.
There is a period of negotiation before the agreement is signed, as each side needs to be certain that the terms distribute risk fairly. That is why due diligence is such an important part of the process, especially for the buyer.
You need to be aware of any potential issues and factor these into the share purchase agreement. Warranties and indemnities may take up a significant portion of the agreement, and are used to protect the buyer from any unexpected costs that are incurred once the sale is complete.
What should a share purchase agreement include?
Typical provisions in a share purchase agreement include:
The agreement to sell and purchase shares
The price at which shares will sold and purchased
How and when the purchase price is to be paid
Whether regulatory or third party approvals are needed
Arrangements for completion
Matters relating to employees
There is no ‘one size fits all’ approach when it comes to share purchase agreements. That is why share purchase agreement templates are not recommended. Even just the matter of how the buyer will purchase the shares can require much deliberation. Will payment be made in cash? Does the buyer want to issue loan notes or other shares? Is the final sale price flexible dependent on the company’s performance (known as an earn-out clause)?
There are many other factors to consider, each of which requires a specialist input.
Who prepares the share purchase agreement?
The buyer’s solicitor prepares a share purchase agreement. The seller’s solicitor revises the agreement and advises their client on the terms and conditions. Both sides may then negotiate on the terms until a final agreement is reached.
How can we help you?
Our commercial property solicitors represent both buyers and sellers wishing to enter into a share purchase agreement.
We act on a fixed fee basis. This starts with a free initial consultation. Contact us to discuss your requirements. Afterwards, we provide a fixed fee quote with no hidden charges.
We can discuss the advantages and disadvantages of both asset purchases and sale purchases with you. If you want to enter into a share purchase agreement, we can draft the document on your behalf. First, we will carry out thorough due diligence checks so we can advise you on tax liabilities, potential risks and compliance issues. Our solicitors can then negotiate the terms and conditions with the other party, reaching an agreement that safeguards your best interests.