SPA

Everything before the SPA — the teaser, the CIM, the
LOI, due diligence — is preparation for this one
document. The Sale and Purchase Agreement is the binding contract that actually transfers the
business: it sets the final price and how it adjusts, states what each side promises is true,
decides who carries which risk after the sale, and lists what has to happen before completion.

For a founder, this is the document you are actually bound by, in contrast to almost everything
signed before it. The promises inside it — called representations and warranties — are what you
can be sued over years after the deal closes if they turn out to be false. For a buyer, it is the
only real protection against having paid for something other than what they thought they bought.

An SPA typically covers: the purchase price and the mechanism for any post-closing
adjustment (often tied to a final working-capital or net-debt calculation); the representations
and warranties — factual promises about the business, from "we own this IP" to "there is no
undisclosed litigation"; indemnities, which say who pays if a warranty turns out to be false
or a specific known risk materializes; conditions precedent — things that must happen before
closing, such as regulatory approval or third-party consents; and
covenants, promises about how the business will or will not be run between signing and
closing, and sometimes for a period after.

The disclosure schedule sits alongside the SPA as its
counterpart: it lists the specific exceptions to the general warranties, and a properly disclosed
exception generally cannot later be the basis for a claim under that warranty. The two documents
have to be read together — a warranty's real scope is only visible once its disclosures are
accounted for.

Signing and closing are not always the same moment. When conditions precedent remain outstanding,
there is a gap between the two, during which covenants govern how the business is run — which is
exactly why those covenants matter as much as the price itself.

The gap between signing and closing is where deals quietly go wrong. If conditions precedent
remain outstanding, covenants govern that period — what the seller can and cannot do while
running the business someone else has agreed to buy. Weak covenants leave a seller with wide
discretion that a buyer may later argue was misused, or a buyer with grounds to walk away from a
deal that was, in substance, fine.

Warranties are only as protective as their disclosure schedule makes them. A broad warranty
sounds reassuring until you realize a properly disclosed exception generally defeats a later
claim. Read the two documents together, not the SPA alone — a warranty that looks strong can be
substantially hollowed out by what has been disclosed against it.

Indemnity caps and time limits decide how much risk actually survives closing. A warranty with
no cap on liability and no time limit for bringing a claim is a very different promise from the
same warranty capped at a modest amount and limited to a defined period. These numbers are
negotiated, not fixed by convention.

Price adjustment mechanics reward careful reading, not trust. A working-capital or net-debt
adjustment sounds mechanical, but the definitions behind it — what counts as a current
liability, how debt-like items are treated — can move the final price meaningfully in either
direction.

Do not assume "standard" language is neutral. Almost every clause in an SPA has a version that
favors the buyer and a version that favors the seller, and what looks like boilerplate is often
one side's preferred default quietly carried through from a previous deal.

The SPA is drafted and finalized in the Legal Framework stage on GetDeal's M&A track (Legal &
Closing on the investment track) — the stage that sits between the earlier commercial negotiation
and the mechanics of transferring money and ownership. Because the deal room shows both sides the
same stage at the same time, neither party is left guessing whether the other considers legal
drafting complete or still in progress.

The Playbook lays out which agreement is signed at each stage, useful context before a founder
starts negotiating warranty caps they have not seen before.