Share Purchase Agreement (SPA)

The Share Purchase Agreement (SPA) is the main contract governing an M&A share acquisition — defining all definitive terms including price and adjustment mechanism (completion accounts or locked-box), seller representations and warranties, conditions precedent to closing, pre-closing obligations, post-closing covenants and dispute resolution. Its negotiation — often several weeks — is the final phase before signing and closing. The SPA is where the economic and legal outcomes of months of due diligence and negotiation are crystallised into binding commitments. Key negotiation battlegrounds include the definition of debt and working capital in the price adjustment, the scope and caps of warranties, and the conditions precedent regime. For both sides of an SME transaction, the quality of SPA drafting determines how risk is actually shared after completion, and standard practice aligns the SPA with the due diligence findings through specific indemnities.

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Example: in a CHF 18.0 million Swiss acquisition, the SPA negotiates: locked-box price mechanism with 5% p.a. ticking fee, warranty package with CHF 120,000 basket and 25% price cap, conditions precedent (banking finance, COMCO approval), 3-year seller non-compete, closing on the 30th business day post-signing. The tax warranty runs 5 years; the general warranty 2 years — standard Swiss M&A terms.

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Hectelion advises on SPA structuring and negotiation in every M&A mandate, coordinating with legal counsel to protect clients' interests on both sell-side and buy-side.