Why sale and purchase agreement (SPA) matters to a first-time founder
This is the main transaction document in many company or asset sales. It determines what is bought, the price, completion conditions, risk allocation and remedies if statements prove untrue. A founder selling a business needs to understand ongoing promises, payment timing and potential liability after completion.
Examples of sale and purchase agreement (SPA)
A buyer agrees to acquire all shares in a software company for €2 million. The SPA requires €1.7 million at completion and holds €300,000 back for 18 months. It lists warranties about tax, intellectual property and customer contracts, plus conditions that must be satisfied before ownership transfers.
Common misunderstanding
An SPA is not always a simple form or merely a record of the price. It can contain extensive warranties, indemnities, limitations and completion mechanics. The abbreviation also has other meanings, and lawyers may use it for either a sale and purchase agreement or specifically a share purchase agreement.
When to use it
Use the term when negotiating or documenting a share, asset or business sale. Founders should obtain transaction-specific legal and tax advice, review every warranty and model deferred or conditional payments. Governing law matters because disclosure standards, remedies, transfer formalities and enforceability differ between jurisdictions.