The Share Purchase Agreement (SPA): What It Must Contain
IGCP Capital Partners · Published
The share purchase agreement translates the negotiation result into binding rules. What it contains, which price mechanisms exist and where sellers are liable.
The company purchase agreement — called Share Purchase Agreement (SPA) for share deals — governs bindingly what is sold, at what price, with which warranties and under which conditions ownership transfers. It is the document in which every weakness of your negotiating position materialises. Those who only take the SPA seriously at the buyer's first draft negotiate uphill.
What is an SPA?
The Share Purchase Agreement is the purchase contract over company shares — the legal core of a share deal. In an asset deal, the counterpart is the Asset Purchase Agreement (APA), transferring individual assets instead of shares. Which route fits is its own decision: Asset Deal or Share Deal?
Formally: the transfer of German GmbH shares must be notarised (Sec. 15 GmbHG); in Austria it requires a notarial deed. The SPA is not an informal paper but a notarial appointment with lead time.
What does a company purchase agreement contain?
An SPA governs six core areas: the object of purchase, the purchase price and its mechanism, warranties and indemnities, conduct obligations until completion, closing conditions, and post-contractual obligations such as the non-compete. Everything else elaborates these six blocks.
| Building block | Governs |
|---|---|
| Object of purchase | Which shares/assets transfer, at which date |
| Price + mechanism | Amount, adjustments, earn-out, payment |
| Warranties | What the seller stands for — and for how long |
| Indemnities | Known risks (e.g. taxes) borne by the seller |
| Closing conditions | What must be fulfilled before completion |
| Non-compete | What the seller may not do after the sale |
Which purchase price mechanisms exist?
Two models dominate: With a locked box, the price is fixed on a past reference balance sheet — simple, predictable, seller-friendly. With closing accounts, the price is adjusted after completion based on a completion balance sheet, typically via net debt and working capital. Variable components such as the earn-out come on top.
How cash and debt move the price: Net Debt. The mechanism is not a formality — locked box and closing accounts often produce noticeably different outcomes.
What is the seller liable for?
Through the warranty catalogue: the seller warrants that accounts are correct, contracts exist, and no hidden liabilities or litigation exist. If a warranty is breached, the seller owes damages — limited by caps, de-minimis thresholds and limitation periods, all of which are negotiable.
Two things soften the liability from the seller's perspective: a clean due diligence with full disclosure — what is disclosed usually cannot constitute a warranty breach — and, in larger transactions, W&I insurance shifting warranty risks to an insurer.
From LOI to signed SPA
The SPA does not appear from nowhere: its cornerstones — price basis, mechanism, warranty scope — are ideally fixed in the Letter of Intent. What remains open there is negotiated against you after due diligence. Signing and closing often fall apart, for instance when approvals are pending.
That this process also works across borders is shown by the IGCP-advised transaction net-haus GmbH → SINGU (Poland, 2025).
Who drafts the company purchase agreement?
An M&A-experienced lawyer — contract drafting is legal advice and belongs in legal hands. The M&A advisor negotiates the commercial points (price, mechanism, warranty cornerstones) and keeps the process pressure up; both roles interlock.
How long do SPA negotiations take?
From first draft to signature usually four to eight weeks — parallel to the final phase of due diligence. The entire sale process takes 6 to 12 months in the market; run in a structured way, 3 to 6 months are achievable.
What is the difference between LOI and SPA?
The LOI is a largely non-binding declaration of intent before due diligence; the SPA is the binding purchase contract after it. Rule of thumb: in the LOI you negotiate from your strongest position — what is written there usually holds until the SPA.
Selling a company is the most important transaction of an entrepreneur's life. Get independent, discreet guidance — IGCP Capital Partners. → igcp.at
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Editorial note: This article was written by IGCP Capital Partners based on our own transaction experience. AI-assisted tools may be used during research and drafting; all content is reviewed by our team before publication.