The share purchase agreement (SPA): a practical guide to business acquisitions

A share purchase agreement is the purchase agreement under which the shares in a company are transferred from seller to buyer. Unlike an asset deal, where individual assets and liabilities are transferred, in a share deal the buyer acquires the entire legal entity with everything that comes with it: contracts, employees, obligations, rights and any hidden risks.

The SPA is usually a lengthy, detailed document resulting from intensive negotiations between professional parties, often assisted by specialized lawyers and advisers. The SPA has three main purposes: to legally structure the transfer, to allocate risks between buyer and seller, and to create clarity about what happens if certain expectations are not met.

In practice, we see that SPAs can vary greatly in size and complexity, depending on the size of the transaction, the sector, the jurisdictions involved and the parties’ bargaining positions. An SPA for a family business will look different from an SPA for the sale of a listed company, but the core structure remains largely the same.

The parties

On the seller side, the current shareholder or shareholders of the target company usually stand. These may be natural persons, such as the founder or family members, but also holding companies, private equity funds or other companies. On the buyer side, we see a similar spectrum: strategic buyers who want to integrate the target into their existing business, financial buyers such as private equity investors focused on returns, or management buy-outs in which the existing management acquires the shares.

In addition to buyer and seller, other parties may also be involved in the SPA, such as guarantors who stand behind certain obligations, escrow agents who hold part of the purchase price, or financiers who impose conditions on the transaction.

Purchase price mechanisms: how is the price determined?

The purchase price is the financial heart of every SPA. But what seems simple — buyer pays amount X for the shares — often turns out to be complex in practice. Between signing and closing, the value of the business may change due to operational developments, seasonal effects or unexpected events. That is why SPAs usually contain mechanisms to adjust the purchase price to the actual situation at closing.

Locked box versus completion accounts

There are two main price determination mechanisms: locked box and completion accounts.

Locked box

Under a locked box mechanism, the purchase price is based on a historical balance sheet (the “locked box date”), often the most recent annual accounts or an interim balance sheet. The buyer pays a fixed price and assumes the economic risk and benefit from the locked box date onward. The seller may not extract value from the business between that date and closing, such as dividends, management fees or loans to related parties; such “leakage” leads to a reduction of the purchase price.

The advantage of locked box is certainty: both parties know the price at signing. The disadvantage for the buyer is that the business may decline in value between the locked box date and closing without any price adjustment. For that reason, the buyer often negotiates extensive covenants requiring the seller to run the business in the ordinary course and refrain from extraordinary actions.

Completion accounts

Under completion accounts, the purchase price is only finally determined after closing, based on a balance sheet reflecting the actual situation on the closing date. Often an indicative price is paid at closing, after which the final figures are prepared within a set period, for example 60 or 90 days. Differences from an agreed reference point, such as a certain level of working capital or net assets, lead to an increase or decrease in the purchase price.

The advantage of completion accounts is that the price reflects the actual condition of the company. The downside is uncertainty and the potential for disputes: the parties must agree on accounting principles, definitions and interpretations. Many SPAs therefore include a dispute mechanism whereby an independent accountant acts as arbiter if the parties cannot agree.

Working capital adjustments and earn-outs

In addition to the choice between locked box and completion accounts, SPAs often contain refinements. A common one is the working capital adjustment: the parties agree a normal or target working capital level, and the purchase price is increased or decreased if the actual working capital at closing is higher or lower. This mechanism prevents the seller from reducing inventory or accelerating collection of receivables shortly before closing in order to generate cash at the expense of the business’s future operations.

Another mechanism is the earn-out: part of the purchase price is made dependent on future performance of the business, for example revenue or profit in the two years after closing. Earn-outs are often used when buyer and seller cannot agree on valuation, or when the seller remains involved after closing and should have an incentive to help the business grow successfully. However, earn-outs often lead to disputes over whether targets were met and whether the buyer made sufficient efforts to achieve them.

Leakage, escrow and holdback

Under a locked box mechanism, the concept of “leakage” is crucial. Leakage includes any transfer of value from the target company to the seller, or to related parties, between the locked box date and closing that is not permitted. Examples include dividend distributions, bonus payments, repayment of loans or payment of above-market remuneration to the seller. The SPA usually contains an exhaustive definition of what is and is not allowed, and leakage leads euro for euro to a reduction in the purchase price.

To cover risks, part of the purchase price is often placed in escrow or withheld as a holdback. In escrow, an amount is deposited with a third party (the escrow agent), who releases it only once certain conditions are met or after a certain period has passed. With a holdback, the buyer retains the amount itself. Escrow and holdback serve as a buffer for potential warranty claims, unexpected leakage or price adjustments still to be determined.

The starting point: the purchase price cannot be negative

A fundamental principle is that the purchase price cannot be negative. This may seem obvious, but in practice price adjustment mechanisms — for example, with strongly negative working capital or substantial debt — could in theory lead to a negative purchase price. The case law is clear: a negative purchase price conflicts with the essence of a sale agreement (Supreme Court 10 October 2003, ECLI:NL:HR:2003:AI0306, para. 3.3.1). Sellers cannot be forced to pay back more than they received, even if this is not expressly addressed in the SPA. This principle applies even where the parties have agreed a detailed adjustment mechanism that could mathematically result in a negative amount. A buyer wishing to acquire a business with negative value will need to devise other structures, such as a symbolic purchase price of one euro combined with an obligation for the seller to assume or repay certain debts.

Representations and warranties: what does the seller guarantee?

Representations and warranties, often abbreviated as reps & warranties or R&W’s, are a core element of every SPA. Here the seller states that certain facts and circumstances regarding the target company are true. Think of statements about the legal structure, financial figures, contracts, intellectual property, employees, compliance with laws and regulations, absence of disputes, environmental liabilities and tax positions.

Function of warranties

Warranties serve several purposes. First, they give the buyer certainty about what it is buying. Second, they allocate risks: if a warranty turns out to be inaccurate, the buyer can claim against the seller, even if the seller did not know the warranty was incorrect (unless otherwise agreed). Third, warranties encourage the seller to provide complete and accurate information during due diligence.

In practice, warranty clauses are often dozens of pages long and highly detailed. The buyer wants warranties as broad as possible; the seller wants to limit scope and carve out known risks.

Disclosure letter and schedules

To prevent the seller from being liable for risks the buyer knows or ought to know, the SPA is usually accompanied by a disclosure letter or disclosure schedules. In these, the seller lists all exceptions to the warranties, often by reference to documents in the data room made available during due diligence. If a warranty states “there are no pending disputes” and the disclosure letter says “except for the proceedings against supplier X as described in document 4.3.12,” then the warranty applies subject to that exception.

The disclosure letter is often heavily negotiated. The buyer wants exceptions to be described specifically and clearly; the seller prefers general references to the data room. Case law shows that vague or general disclosure is often not enough to relieve the seller.

Knowledge qualifiers and materiality

Many warranties contain so-called knowledge qualifiers: the seller warrants something “to the best of its knowledge” or “so far as it is aware.” This limits the seller’s liability to facts of which it was actually aware or ought reasonably to have been aware. The SPA usually defines whose knowledge is relevant, for example the directors and certain key officers, and whether actual knowledge alone is sufficient or whether constructive knowledge also counts.

Materiality thresholds are also common: a warranty applies only to matters that are “material” or “significant,” or to amounts above a certain threshold. This prevents the seller from being liable for trivial issues. Sometimes the SPA contains a so-called materiality scrape when calculating damages: if the warranty itself contains a materiality threshold, that threshold is ignored when calculating compensation, in order to avoid double materiality filters.

Indemnities and remedies: what if something goes wrong?

In addition to warranties, SPAs often contain specific indemnities. Whereas warranties are general statements about the condition of the business, indemnities are targeted undertakings to compensate the buyer for specific, known or foreseeable risks. Examples include an indemnity for tax assessments relating to periods before closing, claims arising from a known dispute, or environmental contamination at a particular site.

The difference between a warranty and an indemnity is legally relevant. For breach of warranty, the buyer must prove that the warranty was inaccurate and that it suffered loss as a result; under an indemnity, the buyer is entitled to compensation as soon as the specified event occurs, often without having to prove causation.

Remedies for warranty breach

If a warranty proves to be inaccurate, the buyer generally has several remedies: damages, price reduction, or in extreme cases rescission of the agreement. In practice, however, SPAs often exclude rescission and limit remedies to damages. The buyer then has to prove that the inaccurate warranty caused loss and how large that loss was. This can be difficult, especially if the damage only materializes later or is hard to quantify.

Some SPAs contain a so-called sandbagging clause, which expressly regulates whether the buyer may claim for a warranty breach if it already knew at closing that the warranty was inaccurate. In continental European SPAs, anti-sandbagging is more common: the buyer cannot rely on a breach it knew about. In Anglo-American SPAs, pro-sandbagging is more common: the buyer’s knowledge does not affect its right to claim.

Limitation of liability: de minimis, basket, cap and time limits

Sellers want to limit their liability for warranty breaches. SPAs therefore usually include a range of mechanisms that reduce the seller’s exposure.

De minimis and basket

A de minimis threshold means that individual claims below a certain amount, for example €10,000 or €25,000, are disregarded. This avoids administrative burden and disputes over small items.

A basket is a threshold for the total of all claims. There are two variants:

Tipping basket: if total damage exceeds the basket, the seller is liable for the full amount from the first euro.
Deductible basket: the seller is liable only for the amount above the basket.

A basket of, for example, €100,000 means that in a tipping basket the seller must compensate the full €101,000 if damage reaches €101,000; in a deductible basket, only €1,000.

Cap

The cap is the maximum amount for which the seller can be held liable. It is often expressed as a percentage of the purchase price, for example 10%, 25% or in some cases 100%. For fundamental warranties, such as ownership of the shares or authority to enter into the SPA, a higher or unlimited cap may sometimes apply.

Negotiating the basket and cap is one of the fiercest parts of any SPA. The buyer wants low thresholds and a high cap; the seller wants high thresholds and a low cap. The outcome depends on negotiating power, due diligence findings and market conditions.

Time limits

Warranties do not last forever. The SPA usually contains a survival period: a period within which the buyer must bring a claim. For general warranties this is often 12 to 24 months after closing; for tax and environmental warranties sometimes longer, for example until the limitation period of the tax assessment expires. For fundamental warranties there is sometimes no time limit or the statutory limitation period applies.

In addition, the SPA often contains a notification period: the buyer must notify the seller within a certain period after discovering a potential breach, on pain of losing its rights.

Covenants: obligations before and after closing

In addition to warranties about the past, SPAs contain covenants: obligations for the future. We distinguish between pre-closing covenants (between signing and closing) and post-closing covenants.

Pre-closing covenants

Between signing and closing, the business must continue to operate normally without the seller eroding value or taking risks. Typical pre-closing covenants require the seller to:

continue the business in the ordinary course;
avoid extraordinary transactions, such as major investments, acquisitions or sale of assets;
make no changes to employment terms or dismiss key personnel;
make no dividend distributions or incur new loans;
make no changes to the articles of association or shareholding structure;
inform the buyer of important developments;
cooperate in obtaining consents and approvals.

A breach of a pre-closing covenant may entitle the buyer to walk away from the deal or seek a price reduction.

Post-closing covenants

After closing, covenants may require the seller to assist with the transition, for example by remaining available for questions for a certain period, transferring customers or training staff. Non-compete and non-solicitation clauses are also common: for a certain period, often two to five years, the seller may not engage in competing activities or poach employees from the acquired business.

For the buyer, post-closing covenants may relate to continuing certain employment terms, maintaining the trade name during a transitional period, or providing financial information to the seller, for example for earn-out calculations or tax returns.

Conditions precedent and the consequences of obstruction

Many SPAs contain conditions precedent: events that must occur before the agreement becomes effective and closing can take place. Common conditions include:

approval by competition authorities (the ACM in the Netherlands, the European Commission in larger transactions);
consent from lenders, for example where the target company has loans containing change of control clauses;
consent from key customers or suppliers;
obtaining permits or licences;
the absence of a material adverse change (MAC, see below).

Best efforts obligations

The parties are usually obliged to use reasonable efforts to satisfy the conditions. For example, the buyer must submit a complete and accurate filing to the competition authority and provide requested information. The seller must cooperate in obtaining third-party consents.

What exactly “reasonable efforts” means is often the subject of dispute. Must the buyer accept a proposed remedy from the competition authority that reduces the value of the business? Must the seller pay a penalty to get out of a contract early? The SPA can specify this, for example using “reasonable best efforts” versus “commercially reasonable efforts,” but interpretation remains highly fact-specific.

Obstruction and article 6:23 Dutch Civil Code

A classic point of contention arises when one party itself prevents a condition precedent from being fulfilled. Article 6:23 DCC provides that a condition is deemed fulfilled if the party to whom the condition is addressed prevents its fulfillment in breach of reasonableness and fairness. Case law also applies this article to SPAs.

For example: the buyer needs its financier’s approval but submits an incomplete application or makes no serious effort to obtain financing. If the seller can show that the buyer obstructed fulfillment, the condition may be treated as fulfilled and the buyer may still be obliged to complete the transaction, or be liable for damages if it refuses.

Conversely, the seller may obstruct fulfillment by failing to cooperate in obtaining consents, withholding relevant information, or taking actions that make competition clearance harder.

The burden of proof and the application of article 6:23 DCC regularly lead to disputes. Parties would therefore do well to specify as concretely as possible in the SPA what efforts are expected from each side and what happens if a condition is not fulfilled.

Material adverse change and exclusion of rescission

A material adverse change clause, also known as a material adverse effect or MAC/MAE, gives the buyer the right to walk away if, between signing and closing, an event occurs that has a material adverse effect on the business. Think of loss of a major customer, a natural disaster, a major lawsuit, or significant regulatory change.

However, MAC clauses are notoriously difficult to invoke. Case law — especially in the United States, but also in Europe — sets a high threshold for what qualifies as material adverse. General market conditions, economic headwinds or sector-wide developments that affect all players usually fall outside the MAC. Only if the target company is affected disproportionately can a MAC claim succeed.

Moreover, MAC clauses often contain extensive carve-outs: categories of events expressly excluded from the MAC, such as changes in law, currency fluctuations or general economic conditions. The COVID-19 pandemic has renewed attention on MAC clauses: in many cases pandemics were excluded, or the effects fell under general market conditions, meaning buyers could not successfully walk away from deals.

Exclusion of rescission

Many SPAs contain a clause excluding both judicial and extrajudicial rescission. The parties choose to resolve disputes over warranty breaches or covenants exclusively through damages, not rescission of the entire agreement. This gives both parties certainty: the seller knows it does not have to take back the shares, and the buyer knows it cannot be forced to return them.

As a matter of principle, the parties are free to exclude rescission. However, the case law has confirmed that only exceptional circumstances can make reliance on such an exclusion clause unacceptable under reasonableness and fairness. Think of intentional deception, fundamental breach of core obligations, or situations where damages are plainly insufficient to compensate the buyer.

In practice, this means that an exclusion of rescission is very powerful. Buyers should realize that after closing they remain stuck with the business, even if serious problems later come to light. This underlines the importance of thorough due diligence and careful drafting of warranties and caps.

Entire agreement and non-reliance

SPAs almost always contain an entire agreement clause, also known as an integration clause. This provision states that the SPA, including annexes and disclosure, constitutes the entire agreement between the parties and that prior agreements, promises or statements — oral or written — are not part of the agreement and are not binding.

In addition, non-reliance clauses are often included: the buyer states that it has not relied on statements or information from the seller outside the SPA, and that it relies solely on the warranties contained in the SPA.

Effect on interpretation and liability

These clauses have important consequences. They limit the buyer’s ability to rely on pre-contractual statements, presentations during management meetings or information in the data room that is not expressly included in the SPA or disclosure. If the buyer claims that the seller said during negotiations that a certain contract would continue, but that warranty is not in the SPA, the buyer cannot rely on it (District Court of Amsterdam, 2 May 2018, ECLI:NL:RBAMS:2018:2948).

The inclusion of an entire agreement clause also means that, when interpreting the SPA, decisive weight may be given to the most obvious linguistic meaning of the text. After all, the parties have expressly recorded that the written text prevails and that prior communication is irrelevant.

Still, the entire agreement clause is not absolute. In cases of intentional deception (fraud) or mistake, reliance on the clause may be unacceptable under reasonableness and fairness. Nor can the clause prevent the buyer from relying on warranties that are actually included in the SPA, even if the seller suggested something different during negotiations.

Interpretation of the SPA

In disputes over the meaning of an SPA, the key question is: what exactly did the parties agree? Under Dutch law, the starting point is the Haviltex standard: when interpreting an agreement, the court must consider the meaning that the parties could reasonably attribute to each other’s statements and conduct, and what they could reasonably expect from each other in that regard (Supreme Court 13 March 1981, ECLI:NL:HR:1981:AG4158). That means not only the literal text matters, but also the context, negotiation history, parties’ intentions and the circumstances of the case.

Greater weight for wording in professional-party agreements

Case law shows, however, that where professional parties sign a detailed SPA, the linguistic meaning of the text is given relatively significant weight (Court of Appeal Amsterdam, 13 October 2020, ECLI:NL:GHAMS:2020:2732, paras. 3.2.1–3.2.3). In that judgment, the Court of Appeal Amsterdam considered it relevant that:

the agreement was detailed;
both parties were commercially active and experienced in entering into such agreements;
both parties were assisted by skilled and specialized lawyers;
the parties paid great attention to the wording, with multiple drafts exchanged before signing; and
after signing, the parties renegotiated specific provisions and restated the text.

In such cases, professional parties are presumed to understand what they are signing and to be aware of the legal consequences of their chosen wording. The court will be less quick to assume that the parties meant something other than what the text literally says, and will be more reluctant to read in implied obligations or correct the text based on assumed intentions.

This does not mean that the Haviltex standard no longer applies — it remains the starting point — but the balancing works differently. The linguistic meaning receives greater weight, and the room for contextual interpretation becomes narrower. This underlines the importance of careful drafting: what is written is what counts.

Allocation of the risk of mistake

A particular point of attention is the allocation of the risk of mistake. In principle, mistake can be grounds for rescinding an agreement, but in the context of an SPA this rarely succeeds. The reason is that the SPA itself already contains extensive risk allocation through warranties, disclosure, due diligence and price mechanisms.

Case law has confirmed that where a professional party in an acquisition consciously accepts the risk that the information provided is incomplete or incorrect, and instead negotiates a reduction in the purchase price, that party cannot invoke mistake (Opinion of the Advocate General, 13 October 2006, ECLI:NL:PHR:2007:AZ3178). The risk of mistake is then deemed to have been factored into the agreement and remains with the mistaken party.

For example: during due diligence, the buyer discovers that the target company’s financial records have gaps. Instead of walking away, the buyer negotiates a lower price and limited warranties. If, after closing, it turns out that the financial situation is even worse than expected, the buyer cannot rely on mistake — it knowingly accepted the risk and factored that into the price (Opinion of the Advocate General, 13 October 2006, ECLI:NL:PHR:2007:AZ3178).

This principle applies even more strongly if the SPA contains entire agreement and non-reliance clauses (District Court of Amsterdam, 2 May 2018, ECLI:NL:RBAMS:2018:2948). The buyer has then expressly stated that it relies only on the SPA and not on other information. A claim based on mistake will only succeed in exceptional cases, for example in cases of intentional misrepresentation that cannot be addressed through the warranties (Opinion of the Advocate General, 13 October 2006, ECLI:NL:PHR:2007:AZ3178).

Warranty and indemnity insurance

In recent years, warranty and indemnity insurance (W&I insurance) has become increasingly common. This insurance covers the risk of warranty breaches: instead of pursuing the seller, the buyer can submit a claim to the insurer. W&I insurance is particularly used in private equity transactions, management buy-outs and situations in which the seller has limited resources or wants to limit its exposure, for example in sales by a bankruptcy trustee or an estate.

Benefits and impact on the SPA

For the buyer, W&I insurance provides certainty: even if the seller is insolvent or difficult to pursue, there is cover. For the seller, it means a clean exit: its liability is limited to, for example, a symbolic amount or the insurance premium, and it does not have to accept escrow or holdback.

The presence of W&I insurance influences SPA negotiations. Warranties are often drafted more broadly because the insurer — not the seller — bears the risk. Caps and baskets may be lower or even disappear. However, the insurer imposes requirements: thorough due diligence, full disclosure, and often its own underwriting process in which it assesses the risks.

W&I insurance also has limitations. Certain risks are not insurable, for example known disputes, tax risks in certain jurisdictions, or environmental contamination. And the premium — usually 1% to 2% of the insured amount — must be paid, which increases transaction costs.

Dispute resolution, governing law and forum choice

SPAs usually contain a dispute resolution clause. The parties choose which law applies, often the law of the jurisdiction where the target company is located, or the law of a neutral jurisdiction such as English law, and which forum will have jurisdiction in disputes.

Arbitration versus courts

Many international SPAs choose arbitration, for example under ICC, LCIA or NAI rules. Advantages of arbitration include confidentiality, flexibility, the possibility of appointing arbitrators with specialist expertise, and the ease of international enforcement under the New York Convention. Disadvantages are the cost and the lack of appeal.

In domestic transactions, the ordinary courts are often chosen, with a specific court designated, for example the District Court of Amsterdam or Rotterdam, to prevent forum shopping. Some SPAs contain a multi-tier dispute resolution clause: first mandatory negotiations between senior management, then mediation if necessary, and only after that arbitration or court proceedings.

Expert determination

For disputes over technical matters — such as completion accounts, working capital calculations or earn-out calculations — the parties often choose expert determination. An independent accountant or other expert decides the disputed point in a binding way, without a full arbitration or court process. This is faster and cheaper, but offers fewer procedural safeguards.

Negotiation and drafting tips for buyer and seller

An SPA is the result of negotiation. Both parties have opposing interests, but also a shared interest in a workable agreement that does not unnecessarily frustrate the deal. Below are some practical tips.

For the buyer

Invest in due diligence: the better you know the business, the more targeted your warranties can be and the lower the chance of unpleasant surprises.
Be specific in warranties: general warranties are hard to enforce. Ask for concrete warranties on critical aspects, for example “contract X continues until date Y and the customer has no termination right.”
Pay close attention to disclosure: check the disclosure letter carefully. Vague references to “documents in the data room” are insufficient; demand specific exceptions.
Limit knowledge qualifiers: try to obtain warranties without “to the best of its knowledge,” or define narrowly whose knowledge counts.
Negotiate caps and baskets realistically: a cap of 5% in a risky acquisition offers little protection. Consider W&I insurance if the seller is unwilling to accept a higher cap.
Think about post-closing covenants: make sure the seller remains available for transition and that non-compete clauses are enforceable.

For the seller

Limit the scope of warranties: give warranties only about matters you are comfortable with, and use knowledge qualifiers where possible.
Ensure full and precise disclosure: this is your best protection against later claims. Be specific and refer to concrete documents and facts.
Negotiate low caps and high baskets: limit your exposure to an acceptable amount. A cap of 10–25% of the purchase price is market-standard for medium-sized transactions.
Limit survival periods: try to restrict warranties to 12–18 months, except for tax and fundamental warranties.
Consider W&I insurance: this can significantly reduce your exposure and smooth negotiations.
Exclude rescission: prevent having to take back the shares if problems arise.

For both parties

Be clear about price mechanisms: make sure locked box or completion accounts are properly defined, including accounting principles and the dispute mechanism.
Define concepts carefully: many disputes arise from unclear definitions. Spend time on the definitions section.
Anticipate conditions precedent: make clear who has to do what to satisfy conditions and what happens if that fails.
Choose a workable dispute resolution clause: consider whether arbitration or court is better, and whether expert determination is useful for technical disputes.
Have the SPA reviewed by specialists: an SPA is not a standard document. Have it drafted or reviewed by lawyers with M&A experience.

Common pitfalls and lessons from case law

The case law on SPAs offers valuable lessons. Below are recurring themes and pitfalls.

Pitfall 1: Unclear price mechanisms

Disputes over the purchase price are among the most common SPA disputes. Parties think they agree on price, but later discover they have different views on how working capital is calculated, which accounting principles apply, or what “ordinary course of business” means under a locked box. The lesson: devote ample attention to the definitions and mechanics of the price mechanism, and consider including a worked example in the SPA or an annex.

Pitfall 2: Too vague disclosure

Sellers who rely on general references to the data room or broad disclaimers risk making disclosure ineffective. Courts require disclosure to be specific and clear: the buyer must be able to understand which exception applies to which warranty. The lesson: make the disclosure letter concrete, with references to specific documents and clear descriptions of the exceptions.

Pitfall 3: Underestimating earn-outs

Earn-outs may seem like an elegant way to bridge a valuation gap, but they often lead to disputes. Questions arise such as: how exactly is the earn-out calculated? Which costs may be allocated? Must the buyer use best efforts to achieve the targets, or may it integrate the business in a way that frustrates the earn-out? The lesson: define earn-out criteria very precisely, regulate the accounting treatment, and include an effort obligation and good faith provision.

Pitfall 4: Unclear efforts under conditions precedent

The lesson: specify the obligations and consider concrete examples or a list of required actions (article 6:23 DCC).

Pitfall 5: Relying on oral agreements

Despite entire agreement clauses, parties sometimes try to rely on oral promises or information from presentations. This rarely succeeds, especially between professional parties. The lesson: make sure all important agreements are in the SPA or disclosure. Do not rely on “it was said during negotiations” — if it is not in writing, it does not count (District Court of Amsterdam, 2 May 2018, ECLI:NL:RBAMS:2018:2948).

Pitfall 6: Insufficient attention to post-closing integration

Many SPAs focus on the deal itself and pay little attention to what happens after closing. This can lead to disputes over transition, access to information, cooperation on earn-outs or compliance with non-compete obligations. The lesson: think about the post-closing phase and record obligations and expectations in the SPA.

The world of M&A and SPAs is constantly evolving. Some trends from recent years:

Increase in W&I insurance: more and more transactions use W&I insurance, changing negotiation dynamics and allowing sellers a cleaner exit.
Focus on ESG and compliance: buyers pay increasing attention to environmental, social and governance aspects. SPAs more often include warranties on CO2 emissions, working conditions, diversity and anti-corruption.
Impact of COVID-19 and other crises: the pandemic brought MAC clauses and force majeure back into focus. Parties now pay more attention to pandemic carve-outs and business continuity.
Digitalisation and cybersecurity: warranties regarding IT systems, data protection and cybersecurity have become standard. Buyers want certainty that no data breaches have occurred and that systems are secure.
Faster transactions: better technology, such as virtual data rooms and e-signatures, and experience with remote due diligence have made transactions faster. This increases the pressure on parties and advisers to act quickly and carefully.

Final thoughts

A share purchase agreement is more than a legal document — it is the blueprint of a business acquisition, a risk allocation mechanism and a compromise between buyer and seller. A well-drafted SPA protects both parties, creates clarity and prevents disputes. A poorly drafted SPA leads to frustration, costly litigation and disappointed expectations.

Whether you are buyer or seller, invest in thorough preparation, proper due diligence and careful drafting. Use experienced advisers who know the ins and outs of M&A. Be realistic about risks and willing to negotiate a balanced allocation. And realize that the SPA is not the end point, but the beginning of a new phase: the integration and growth of the acquired business.

Do you need advice on a specific transaction or dispute? Get in touch. We will be happy to help.

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Sources:

Supreme Court 13 March 1981, ECLI:NL:HR:1981:AG4158.
Opinion of the Advocate General 13 October 2006, ECLI:NL:PHR:2007:AZ3178, para. 8.1.
Court of Appeal Amsterdam 13 October 2020, ECLI:NL:GHAMS:2020:2732, paras. 3.2.1 to 3.2.3.
District Court of The Hague 27 June 2007, ECLI:NL:RBSGR:2007:BB3446.
Supreme Court 10 October 2003, ECLI:NL:HR:2003:AI0306, para. 3.3.1.
Article 6:23 DCC.
District Court of Amsterdam 11 April 2025, ECLI:NL:RBAMS:2025:2351, paras. 4.19, 4.21 & 4.23.
District Court of Amsterdam 2 May 2018, ECLI:NL:RBAMS:2018:2948.

mr. Amir Adl Rudbordeh

21.08.2026

Uncategorised