Spa Notes

LPC Law Notes > Private Acquisitions Notes

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SPA?

Drafted by B and so will be slanted in favour of B (e.g. warranties with few limitations, etc). S to amend the first draft and make it more balanced.

1. Parties and date
? typically B and S (note that the target company is not typically party to the agreement)
? where more than one seller, details of all sellers normally set out in Schedule to the agreement
? where some of sellers give warranties and others don't, the parties will be described as "S(s), warrantor(s) and B(s)".
? when the parties execute the agreement it will be dated, so creating a binding contractual agreement to buy and sell either Shares of the target company or the assets of Business.

2. Operative provisions (i) Definitions and Interpretation
? Commence with definitions and interpretations clause - purely defines terms used throughout the agreement and imposes no obligations
? Sometimes contains a definition of all matters "disclosed" (more common to put in a separate disclosure letter)
? Interpretation - statutory provisions are a matter of contention
? B will want to provide expressly that reference to statutory provisions includes subsequent amendments.
? this is risky for S as it may take on the risk of liabilities increasing as a result of legislation enacted after completion which has retrospective effect. (ii) Conditions precedent
? Normally exchange and completion are simultaneous. However, SPA may be entered into on conditional basis
? If it is conditional it will normally include:
? an obligation to seek fulfilment of a condition
? a longstop date by which the condition must be fulfilled or waived
? time frame within which the acquisition must complete once the condition has been fulfilled
? Example conditions precedent: (i) shareholder approval (ii) approval of competition authorities (iii) industry specific consents (iv) third party consents (iii) Agreement to purchase and sell
? SPA will set out what is being bought and sold - normally refers to a detailed schedule confirming shareholdings or assets being acquired.
? SPA will also provide that the parties agree to sell and purchase specified shares or assets.

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