Company purchase agreement (SPA).

A company purchase agreement follows a proven structure. After defining the object of sale and the purchase price, the parties govern the warranties of the seller, indemnities for known risks and any purchase price adjustments. Annexes with financial statements, contracts and disclosure schedules form the factual basis of the assurances.

In a share deal the object of sale is the share or the stock, in an asset deal the precisely described set of assets and contracts. In both cases we interlock the provisions so that the purchase price mechanics, the warranty catalogue and the completion steps are aligned and no gap arises.

The warranty catalogue is the heart of the commercial allocation of risk. The seller assures the condition of the company as at a cut-off date, for example on balance sheets, taxes, contracts and litigation. Indemnities are added for known risks, which require a concrete trigger and an ordered settlement.

So that liability remains calculable for both sides, it is limited through a liability regime: a maximum amount (cap), trivial thresholds such as de minimis and basket and separate limitation periods. The relationship to the general warranty under the ABGB must be addressed expressly, so that contractual warranties and the statutory regime do not pass each other by.

In larger transactions the signing of the contract and the actual completion (closing) fall apart in time. At signing the parties commit, at closing the transaction is actually completed: shares pass over, the purchase price is paid and the agreed completion acts are carried out.

The period between signing and closing serves to satisfy outstanding conditions, such as merger control clearances or third party consents. For this phase we define clear conduct obligations of the seller, so that the company is continued in the ordinary course of business and its value is preserved until closing.

Conditions precedent set out which requirements must be met before closing takes place. Typical examples are regulatory clearances, consents of contractual partners or corporate bodies and proof of certain financing. If the conditions are not met by a cut-off date, the contract can be unwound.

The MAC clause (material adverse change) protects the buyer against significant adverse changes between signing and closing. If a defined event occurs that materially reduces the value of the company, the buyer may refrain from completion. The closing mechanics finally govern the sequence of completion acts step by step, so that handover and payment of the purchase price fit together without gaps.

Caution is warranted when the warranty catalogue does not match the findings of the due diligence, when the liability regime is left without a cap and trivial thresholds or when conditions precedent are drawn so widely that closing becomes uncertain. A blanket MAC clause is also a warning sign, because it rarely holds up in the event of a dispute.

The sensible next step is a structured run-through of the central clauses and alignment with the results of the due diligence. We draft the SPA from the warranty to the closing mechanics and accompany completion from signing to closing.