The buyer`s goal is to get comprehensive insurance and warranties, as they provide a valuable source of information about what the buyer is paying money for. On the other hand, the seller`s goal is to limit repetition and warranties. In a merger and acquisition transaction, the share purchase agreement or “SPA” is a definitive agreement between the buyer and the seller that completes all the general conditions related to the acquisition of the seller`s shares. In an SPA, unlike an asset purchase agreement, ownership of the seller`s assets and all liabilities is transferred through the acquisition of the seller`s shares. It is extremely important for the seller to review the “Representations and Warranties” section of the SPA to ensure that there are no statements that are considered false. Misrepresentations and warranties may result in legal action even after the transaction has ended. Finally, to make this article an accessible overview of an asset purchase agreement for non-lawyers, I`ve made a number of simplifications below. Please treat this article as a starting point to begin your research, not as a final legal treatise. In this sense, we are moving away from it. A typical APA begins with an introductory paragraph that identifies the buyer, seller, and all other parties to the agreement. It also indicates the effective date of the PA which, as should be noted, may not be the same as the closing date.
The effective date is usually the date the ABS is signed. The closing date is the date on which the transaction is completed (when the money is exchanged and the assets are officially transferred to the buyer). Often, the effective date and the closing date are one and the same thing. This is sometimes called a “sign and close” agreement because the parties sign and close at the same time. However, it is also common to see a closing signature agreement where the signing of the APA is only the first domino to fall before the agreement can take place. More information on this subject can be provided in article III. Defining and controlling behavior is an important goal of the APA.  The buyer must demonstrate its authority to acquire the asset […].