How to read a share purchase agreement
Parties and subject matter, price, representations and warranties, conditions to closing, liability: the order in which to read the agreement.
The agreement transfers ownership and allocates risk. Read it in this order.
Parties and subject matter. Who is selling, who is buying, what exactly is being transferred and in what percentage.
Price. Is it paid in one go or in instalments? Can it be adjusted after closing? If part of the price depends on future performance, how is it calculated?
The seller’s representations and warranties. The seller makes statements about the company: that the documents are accurate, that there is no undisclosed litigation, that the balance sheet reflects reality. If they prove untrue, the buyer may claim compensation, within the limits and time periods set out in the agreement.
Conditions to closing. What must happen before the transfer: approvals, third-party consents, any notifications to the authorities. Check whether the transaction requires notifications or approvals.
Liability and its limits. Caps, time limits, exclusions.
Non-compete and confidentiality. The seller may undertake not to compete for a period; both parties keep the information confidential.
An agreement is balanced when risks are allocated deliberately, not when they are buried in lengthy clauses.
The information in these articles is general. Your specific situation requires a review of the documents.
Alina PufuAlina Pufu is a corporate and commercial lawyer in Bucharest (sole practice: Alina Pufu Law Office). She works on commercial contracts, M&A transactions, due diligence and intellectual property.