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Mergers & Acquisitions · Question
Short answer
A share purchase agreement is the binding contract by which the shareholders transfer their shares in a company to a buyer. For a seller, the clauses that matter most are those governing the price and how it is paid, the statements you give about the business and your liability for them, indemnity limits, conditions before closing, and restrictions on you afterwards.
The term sheet sets the commercial outline; the share purchase agreement turns it into enforceable obligations, usually with a long list of schedules. Sellers often focus on the headline price and skim the rest, yet the fine print decides how much you actually keep and for how long you stay exposed.
| Clause | What to look at |
|---|---|
| Price and adjustment | How the price is fixed and what can change it after closing |
| Payment mechanics | Cash at closing, deferred or escrowed portions, and the conditions for release |
| Conditions to closing | Approvals and consents needed, and who bears the risk if they fail |
| Statements about the business | How broad they are and whether disclosed items qualify them |
| Indemnities and limits | What you must compensate, up to what amount and for how long |
| Conduct before closing | What you may and may not do in the business meanwhile |
| Restrictions after exit | Non-compete and non-solicit scope, duration and area |
| Termination and disputes | When either side can walk away, and where disputes are decided |
Open-ended liability without a clear ceiling, broad statements with no disclosure carve-outs, and deferred payments that depend on conditions you do not control are the common trouble spots. Also read what happens to guarantees you have given to lenders.
Negotiate before signing, not after
Once the term sheet is signed, buyers resist changes to its principles. Have your lawyer review the draft agreement early, and read it against the term sheet to catch drift.
This is general information. Engage a corporate lawyer and your tax adviser before you sign, because each clause interacts with the others.
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This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.