The first part of your share purchase agreement is often referred to as a preamble. This section identifies the agreement, identifies the parties and sets the contract date. In the preamble, you will often see parties called “sellers” and “buyers.” Depending on the structure of your acquisition, the document will likely be in the form of an Asset Purchase Agreement, a Stock Purchase Agreement or a Merger Agreement. It will be crucial that you understand what the agreement says and how it works, but unless you have experience in buying or selling businesses, such an understanding can be a big order. Thank you for reading the IFC`s guide to a definitive sales contract. For more information on mergers and acquisitions, see the following CFI resources: Before entering into an agreement, a Memorandum of Understanding (MOU) will be established to explain the proposed sale. A buyer should have due diligence and ensure that the sales contract has the same conditions as the LOI. As part of a share purchase agreement, the seller transfers the shares of the company on behalf of the buyer. As a result, the purchaser holds the assets and liabilities that were previously owned by the sales company. This type of transaction is also called “share sale.” As a buyer, for example, you should indicate that you are not obligated to close the acquisition, except: a) all insurance and guarantees of the seller are true on the reference date, (b) the seller has fulfilled all his prior obligations; (c) the seller`s transaction did not take a serious turn for the worse (often referred to as “significant negative change”) and (d) the seller delivered signed versions of all other agreements that may be required in connection with the acquisition, for example.
B a trust agreement or a transitional agreement. To make it easier for you to enter the process, we identify the four sections of each sales contract that are most important to you as a buyer (with the exception of the short section which, of course, describes the purchase price), and discuss in plain English what these four sections do for you as a buyer: Here are some items that are not included in the agreement. In this section you will also find the price and all adjustments to the purchase price as well as all other items that were shared between the parties when the agreement was reached.