For the purposes of this guide, we assumed that your transaction would be structured as a sale of shares and not as a sale of the business or assets. In the event of a sale of shares, the main transaction documents would be as follows: before entering into a sale, it is important to ensure that the transaction has been duly approved, not only by your board of directors, but also by the buyer`s board of directors. The share purchase agreement (or “SPA”) is the key document that deals with the sale of your business. It will cover a number of related areas, but in short, it is simply an agreement to sell your shares in the company (the “Purpose”) at an agreed price. If you leave the company, you must resign from any job and/or office you will currently hold. As part of this process, you will be asked to waive any claims you have against the target company, its employees and senior managers, which is usually done through a compromise agreement. As part of the sales process, you`re supposed to share information about your business with potential buyers. In order to maintain confidentiality, make sure that there is an appropriate confidentiality agreement before information is disclosed. An asset sale is usually not as documented and we are happy to discuss with you the corresponding transactional documentation if this is useful. A large part of the SPA offers the buyer contractual comfort in relation to the objective. For example, the buyer expects to benefit from a number of guarantees regarding the target company and its activities. These are intended to ensure that the goals are “healthy” and that all material problems are brought to an end.
If a warranty proves to be false (for example. B if the objective is the subject of a dispute, if the seller has guaranteed that there is no dispute in the absence of a dispute), the buyer is entitled to an infringement. 2) The disclosure letter also works in combination with warranties, as it allows the seller to respond to any liability under warranties and effectively “eliminate” it. The seller does this by pointing out to the buyer if and how a warranty is false or inaccurate and provides supporting evidence/documents. For this reason, the disclosure letter is a crucial document for the seller – the buyer cannot claim under the guarantees whether the relevant facts have been properly disclosed. During a share sale, the buyer acquires the target company “lock, stock and barrel”. The buyer acquires not only the target business, but also the target company and its entire business/tax history. The tax agreement aims to draw a line in the sand (typically at the time of completion), so the seller is responsible for all prefabricated taxes and the buyer is only responsible for the completion tax.
(1) the advertising letter offers the buyer the opportunity to collect information about the business that may not have been covered by due diligence; and it will be important to identify certain people in your company who have the responsibility to move the transaction forward. Completing a transaction can be a heavy burden, and to ensure that we do so successfully without compromising your existing business, it is important to ensure that your internal team has the right resources.