SPA (Share Purchase Agreement)
The definitive legal agreement governing the sale and purchase of shares in a company, including price, conditions precedent, representations, warranties, and indemnities.
Also known as: Share Purchase Agreement, Sale and Purchase Agreement
One-line definition
The SPA is the binding contract that closes the deal — once signed and conditions are met, the transaction completes.
Key sections relevant to TS
- Price definition and adjustment mechanism (locked box vs completion accounts).
- Representations and warranties (basis for W&I insurance).
- Earn-out provisions.
- Net Debt and NWC definitions.
- Indemnities for specific identified risks (tax, environmental, etc.).
Related terms
W&I Insurance (Warranty & Indemnity)
An insurance policy that covers losses arising from breaches of seller representations and warranties in the Share Purchase Agreement.
Earn-Out
A deferred payment mechanism where part of the acquisition price is contingent on the target meeting agreed financial or operational milestones post-closing.
Locked Box Mechanism
A deal structure where the price is fixed at signing based on a historical balance sheet date, with no post-closing price adjustment.
Completion Accounts
A post-closing price adjustment mechanism where the actual balance sheet at the completion date is compared against an agreed target to determine a price true-up.