The SPA (share purchase agreement) — known in Spanish as the contrato de compraventa de acciones — is the document that closes a mergers and acquisitions (M&A) deal. It is the contract in which buyer and seller formalize, now with binding legal effect, all the final terms of the transaction.
In this guide, we explain exactly what an SPA is, which clauses it should include, when it is signed, how it differs from an APA, and the most common mistakes when negotiating it.
What is an SPA, or share purchase agreement?
An SPA is the contract through which the buyer acquires a company's shares or equity interests, thereby transferring full or partial ownership of the business. Unlike the LOI, which is the non-binding letter of intent, the SPA is fully binding: once signed, the parties are legally obligated to fulfill all the commitments in the contract.
The SPA sets out all the legal, financial, and operational terms agreed during the negotiation: price, payment method, conditions, warranties, exclusions, deadlines, etc. It is the longest and most technical document in the entire deal, and it usually requires several rounds of negotiation between both parties' lawyers before it is finally signed.
Its importance is crucial: a well-drafted SPA protects both parties against potential future problems (undisclosed debts, litigation, regulatory changes, etc.). A poorly drafted SPA can lead to costly legal disputes years after the deal.
SPA vs. APA: which to choose in each case
In M&A deals, there are two main ways to acquire a company: the SPA (share purchase agreement) and the APA (asset purchase agreement). The choice between them depends on the parties' objectives and the characteristics of the transaction.
Share purchase agreement (SPA)
In an SPA, the buyer acquires the company's shares or equity interests. This means the entire business is transferred: all assets, liabilities, contracts, obligations, and rights.
- ✅ Operational continuity: the company keeps operating with the same tax ID (CIF), the same contracts, and the same employees.
- ✅ Faster and simpler from an operational standpoint.
- ⚠️ The buyer assumes all liabilities, including hidden or undisclosed ones.
- ⚠️ A complete break with the previous partners or shareholders.
Asset purchase agreement (APA)
In an APA, the buyer selects which specific assets to buy (machinery, brands, software, customer portfolio, real estate) and which liabilities to assume. It's an "à la carte" purchase.
- ✅ Greater control over what is purchased: unwanted assets can be excluded.
- ✅ Lower risk of inheriting hidden liabilities.
- ⚠️ More complex legally: each asset must be transferred individually.
- ⚠️ Loss of continuity in some key contracts (with customers, suppliers, employees).
In practice, in M&A deals involving Spanish SMEs, the SPA is the most common option because it allows the deal to close more quickly and completely. The APA is used more in specific situations: companies in insolvency proceedings, divisions of corporate groups, or when the buyer only wants certain strategic assets.
At what point in the process is an SPA signed?
The SPA is signed at the end of the sale process, once all the preliminary stages have been completed:
- Initial contact and NDA: buyer and seller sign a non-disclosure agreement.
- Review of the teaser and the information memorandum: the buyer analyzes the opportunity.
- Signing the LOI: interest is formalized with non-binding preliminary terms.
- Due diligence: the buyer analyzes the company in depth.
- Negotiating the SPA: all the clauses of the final contract are drafted and negotiated.
- Signing the SPA and closing: the deal is closed with the final contract. ⬅️ We are here
To see the full process step by step, we recommend our guide on the 5 stages of an M&A deal.
The most common mistakes when signing an SPA
These are the mistakes that most hurt the seller (or the buyer) when closing a deal with an SPA:
- Signing without legal counsel specialized in M&A: the SPA is a technical document that requires specialized lawyers, not generalists. A drafting error can cost millions.
- Not negotiating the representations and warranties clauses properly: they are the most common source of post-closing disputes. You need to define precisely what is warranted, for how long, and with what limits.
- Accepting unlimited indemnification clauses: the seller should negotiate reasonable caps (maximum limits), deductibles, and claim periods.
- Not providing for price adjustments: months can pass between signing the LOI and closing. Without price adjustment mechanisms (working capital, net debt), one of the parties can end up worse off.
- Underestimating non-compete clauses: these are especially important for the buyer. A period that is too short or a poorly defined geographic scope can make them useless.
- Overlooking specific legal and tax issues: certain deals require administrative approvals or have significant tax implications that must be anticipated in the SPA.
To learn more about this topic, we recommend our guide on legal considerations when selling an SME.
Frequently asked questions about the SPA
How long does it take to sign an SPA?
From signing the LOI to signing the SPA usually takes 2 to 4 months, depending on the complexity of the deal and the due diligence findings. Simple deals can close in 6–8 weeks; complex deals (multinationals, regulated sectors) can take up to 6 months.
Who prepares the SPA?
It is usually prepared by the buyer's lawyer, since the buyer is the party taking on the risk of the deal. The seller (with their own lawyer) reviews it, proposes changes, and negotiates the terms. In balanced deals, the initial draft may go through several rounds of negotiation before the final signing.
Does the SPA have to be signed before a notary?
In Spain, yes. Transferring a company's shares or equity interests requires a public deed executed before a notary to be fully legally valid against third parties. This is the closing stage, where the SPA is signed and the payments are made.
What happens if something undisclosed is discovered after signing?
If the findings contradict the seller's representations and warranties, the buyer can claim indemnification under the SPA's clauses. That's why it's so important to negotiate these clauses carefully: define caps, claim periods, deductibles, and dispute resolution procedures.
Are you preparing to sell your business or evaluating an acquisition?
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