An SPA typically contains the object of purchase, the purchase price mechanism, closing conditions, the seller's warranties, indemnities, liability limits, non-compete clauses and dispute resolution rules. Under German law, the purchase of shares is a purchase of rights under § 453 BGB. The statutory warranty rules are a poor fit and are therefore almost entirely replaced by contractual rules.
For the seller, the SPA determines how much of the purchase price is actually kept. Broad warranties, long limitation periods and high liability caps can reduce the proceeds after the event. Rules on earn-outs, vendor loans and rollover equity are equally important.
The first draft usually comes from the seller in an auction process and from the buyer in exclusive negotiations. Whoever writes the draft sets the starting point. For a German GmbH, the SPA must be notarised under § 15 GmbHG.
Example
Hypothetical example: The SPA provides for a purchase price of €12 million. Liability for warranties is capped at 10 percent, i.e. €1.2 million. Claims can only be asserted once they reach a total of €120,000 (1 percent) and become time-barred after 18 months.
SPA vs. APA
| Feature | SPA (share deal) | APA (asset deal) |
|---|---|---|
| Object of purchase | Shares in the company | Individual assets |
| Contracts with third parties | Remain in place | Must be transferred |
| Form for a GmbH | Notarised | Notarised only for real estate |
Sources
- Bürgerliches Gesetzbuch (BGB), § 453 Rechtskauf, Bundesministerium der Justiz / gesetze-im-internet.de
- Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbHG), § 15 Übertragung von Geschäftsanteilen, Bundesministerium der Justiz / gesetze-im-internet.de