Stock Purchase Agreement

The stock purchase agreement is an agreement where all terms and conditions are finalized when it comes to the sales and the purchase of the shares of the company. This is not same to an asset purchase agreement, where the assets are bought and sold instead of the shares. The following items are listed in a stock purchase agreement i.e. name of company, name of purchaser, warranties and representation made by seller and purchaser, possible employee issues such as benefits and bonuses, how many shares are sold, where and when the transaction takes place, indemnification agreement over costs which are unforeseen.

A letter of intent is formed before the agreement is finalized to explain a proposed sale. A purchaser needs to have due ingenuity and should settle on sure the Purchase Agreement and the letter of aim have similar terms. The seller should specially look at the sale and purchase section and the warranties and representations section. The sale and purchase section ought to have precisely the same terms that the letter of intention has. If any difference is found, this is probably due to buyer due diligence and needs to be negotiated before the share purchase agreement is complete.

The warranties and responsibilities need to be checked to make sure there is not any statement which is untrue. If this happens and is found later, there will be legal action and recourse. There might be a price tag change after the transaction where the seller needs to repay the buyer if there are falsifications.