The share purchase agreement (SPA), explained
What an SPA is, what it contains, and how it is negotiated to close an M&A deal.
A share purchase agreement (SPA) is the binding legal contract for the sale of a company’s shares. It sets out the price and payment mechanics, the conditions to completion, the seller’s warranties and indemnities, and the remedies if those statements prove untrue. It is negotiated after due diligence, signed at exchange and completed once conditions are met.
What a share purchase agreement (SPA) is
The SPA is the definitive agreement that closes an M&A transaction — the binding contract transferring a company’s shares from seller to buyer. It documents price and payment, conditions to completion, the warranties and indemnities the seller gives, and the remedies available to the buyer.
What an SPA includes
- The parties and the shares being sold
- The price and any adjustment mechanism — completion accounts or a locked-box
- Conditions to completion (regulatory approvals, consents)
- Seller warranties on accounts, tax, contracts, litigation and compliance
- Indemnities for specific known risks
- Restrictive covenants (non-compete, non-solicit)
- Limitations on the seller’s liability — caps, baskets and time limits
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The SPA in an investment banking / M&A process
After the adviser has run the sale, agreed a price and completed diligence, the SPA converts the commercial deal into a binding contract. The corporate finance adviser negotiates the commercial terms — price adjustments, the warranty and indemnity package, and the caps and baskets — alongside legal counsel, so the client’s value and risk position are protected. See sell-side M&A and deal strategy.
SPA vs letter of intent
An LOI is a largely non-binding statement of proposed terms issued before diligence; the SPA is the binding contract negotiated after it. The LOI frames the deal; the SPA commits the parties.
Related pages
Frequently asked questions
The binding legal contract for the sale of a company’s shares, setting out price and payment mechanics, conditions to completion, seller warranties and indemnities, and remedies. It is negotiated after due diligence and signed at exchange, with completion once conditions are met.
Parties and shares; price and any adjustment (completion accounts or locked-box); conditions to completion; seller warranties on accounts, tax, contracts and litigation; indemnities; restrictive covenants; and limitations on the seller’s liability.
It is the definitive agreement that closes an M&A deal. The adviser negotiates its commercial terms — price, warranties, indemnities and liability caps — alongside legal counsel, converting the agreed deal into a binding, risk-allocated contract.
Last updated: August 2026.
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