Contract guide
Share Purchase Agreement (for Private Companies) — What to Include
A private-company share purchase agreement sets the terms of a stock sale. Learn what to include for price, disclosures, approvals, closing, and liability.
Written and reviewed by Talking Tree's legal team · Last reviewed September 2026
Buying shares can transfer ownership and control without moving the company's individual assets into a new entity. It also leaves the business's existing obligations inside the company. A Share Purchase Agreement makes the price, ownership being transferred, and allocation of deal risks explicit before closing.
What Is a Share Purchase Agreement (for Private Companies)?
A Share Purchase Agreement (SPA), also called a stock purchase agreement, records the sale of shares in a corporation. For a secondary sale, the shareholders sell existing shares to the buyer; for a new issuance, the company sells newly issued shares. This guide focuses on a negotiated purchase of existing private-company shares. New investment rounds may require different financing documents.
When Do You Need One?
- You are buying all or part of a privately held corporation
- A founder or investor is selling an existing stake
- You are acquiring a business through a stock purchase
- You need to document due diligence findings and conditions before ownership changes
What Should a Share Purchase Agreement (for Private Companies) Include?
1. Parties and Shares
Identify each seller, the buyer, and the company, together with the class and number of shares. Reconcile ownership against the stock ledger, capitalization table, options, and other rights that could affect the transaction.
2. Price and Payment
Specify the price, payment method, escrow or holdback, and any adjustment mechanism. If an earnout applies, define the metrics, accounting rules, reporting access, and dispute process.
3. Ownership and Transfer Restrictions
Address liens, rights of first refusal, co-sale rights, and required consents. Review the charter, bylaws, shareholder agreements, and applicable securities requirements before assuming the shares can be transferred.
4. Representations and Disclosure Schedules
Record assurances about share ownership and, where appropriate, the company's finances, contracts, taxes, IP, employees, litigation, and compliance. Disclosure schedules identify exceptions and should be completed before signing.
5. Pre-Closing Obligations
If signing and closing occur separately, define how the business will operate in the interim. Set limits and consent procedures for unusual spending, new debt, distributions, or other significant changes.
6. Conditions to Closing
Identify required approvals, financing conditions if negotiated, third-party consents, and other completion requirements. Assign responsibility and a deadline for each deliverable.
7. Indemnification and Risk Allocation
Define covered claims, claim procedures, survival periods, thresholds, and liability caps. Align any escrow with these provisions and distinguish seller obligations from obligations of the company.
8. Closing Deliverables
List payment instructions, transfer documents, certificates or book-entry steps, resignations if relevant, releases of liens, and updates to company records. Verify payment instructions through a trusted channel.
9. Termination and Disputes
Set the outside closing date, termination rights, consequences of breach, and governing law. Address continuing confidentiality obligations and any post-closing assistance.
Common Mistakes Founders Make
Treating a stock deal like an asset deal. The company generally retains its liabilities. Due diligence and contractual remedies matter even if the buyer is only purchasing shares.
Assuming private shares are freely transferable. Contractual restrictions and securities laws can affect the transaction.
Leaving disclosure schedules until closing. They can materially change the buyer's understanding of the business and the negotiated protections.
Why This Matters for Founders
An acquisition can look straightforward on a capitalization table while hiding significant operational and legal issues. A detailed SPA connects the buyer's diligence to enforceable deal terms and gives both sides a clear closing checklist.
For a preliminary asset deal, see the Letter of Intent for Asset Acquisition. Its scope differs from this guide's stock purchase.
Frequently Asked Questions
How is a share purchase different from an asset purchase?
A share purchase transfers ownership in the company, which generally keeps its assets and liabilities. An asset purchase identifies particular assets and assumed obligations to transfer.
Can private-company shares be sold freely?
Not necessarily. Company documents, investor rights, and securities laws may restrict transfers or require approvals and an exemption.
What should a share purchase agreement include?
The parties and shares, price, disclosures, transfer restrictions, closing conditions, representations, indemnification, and closing deliverables.
Legal and Practical Context
Private-company securities are often restricted, and resale may require registration or an available exemption under federal and state law. A signed SPA does not itself satisfy those requirements. SEC guidance on private secondary markets.
This guide focuses on common U.S. business considerations. Requirements and enforceability depend on the jurisdiction and the facts of the arrangement.
Explore Talking Tree's Contract Studio
Cedar, Talking Tree's Contract Studio, brings document preparation and signing into one workflow. Use this guide to organize your requirements, then explore the available templates and tailor the document to your business.
Get started with Talking Tree.
This page is for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a licensed attorney.