Sales contracts in M&A

The Sales and Purchase Agreement (SPA) is the most important legal document in an M&A transaction, clearly defining the rights and obligations of the parties, the terms of the transaction, and measures to protect your interests.

Important clause

Terms and conditions regarding the subject of the transaction:

Clearly identify the subject of the transfer: shares/capital contributions or assets.
Number, type of shares/capital contributions, or details of assets being transferred.
The corresponding ownership percentage after the transfer is completed.

Terms regarding transfer price and method of payment:

Transfer price and basis for determining the price.
Payment method: cash, or securities
Price adjustment clause based on the results of an audit.
Deposit amount and terms and conditions for deposit refund/non-refundable

Terms and conditions regarding the time and place of the transaction:

The time of contract signing and the time of transaction completion (Closing)
Location where transfer procedures are carried out
Time limit for the transferor to fulfill their obligations

Corporate governance terms after M&A:

Changes in key management personnel.
Commitment to business operations and development strategy
Voting rights and veto rights of the parties

Prerequisites

Conditions must be met before the transaction can be completed.

Common prerequisites:

The Due Diligence procedure was completed and no serious problems were detected.
With the approval of the competent authority (Competition Authority, State Securities Commission, etc.)
No Material Adverse Change (MAC) violations detected.
With the approval of third parties (banks, partners, major clients)
The target business maintains all necessary operating licenses.

The importance of prerequisites:

Protecting the buyer from risks arising before the transaction is completed.
Create a legal basis for canceling a transaction if a serious problem is discovered.
Ensure compliance with legal regulations and follow necessary procedures.

Guarantees and assurances

Seller's guarantees and assurances:

Legal status and transfer rights of the seller
The legal status of the target business (licenses, compliance with the law)
Financial situation and business performance
Assets and liabilities of the target company
Disputes, lawsuits, and potential legal risks.
Comply with tax obligations and other financial obligations.
Important contracts and related-party transactions

Buyer's guarantee and assurance:

Legal standing and financial capacity
Payment capacity and financial commitment
Comply with all relevant legal regulations regarding the transaction.
Purpose of acquisition and business plan after M&A

Term and scope of guarantee:

Legal standing and financial capacity
Payment capacity and financial commitment
Comply with all relevant legal regulations regarding the transaction.
Purpose of acquisition and business plan after M&A

Compensation for damages

Mechanism for compensation for damages:

Cases that give rise to compensation obligations (breach of commitment, failure to fulfill obligations)
Compensation methods: monetary compensation, price adjustment, share redemption, etc.
Minimum (De Minimis) and maximum (Cap) compensation thresholds.
Compensation claim and settlement process

Measures to secure compensation obligations:

Escrow Account: retains a portion of the payment.
Bank guarantee or personal guarantee
Warranty & Indemnity Insurance

Contract template

M&A Vietnam provides internationally standardized M&A contract templates, drafted by a team of experienced lawyers and compliant with Vietnamese law. The templates are designed specifically for each type of transaction and are adaptable.

Download contract template

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Sales contracts in M&A