The sentence that quietly resets your price

"The Purchase Price shall be the Base Price, as adjusted in accordance with Clause 5, and shall be subject to the deductions and retentions set out in Clauses 9 and 11." One sentence, three cross references, and the figure you shook hands on in the letter of intent suddenly has three doors out of it. In SPA M&A negotiations that sentence is the whole game, because everything a buyer wants to recover later has to be plugged into it somewhere. Sellers read the number. Buyers read the cross references.

What that costs is not theoretical. Define the price against completion accounts rather than a locked box and the buyer controls the closing balance sheet, and with it the working capital target. Agree a cap at the full price with a twenty four month survival period and part of your money is not yours until the second anniversary of closing. Neither position is aggressive drafting. Both are where the buyer's counsel opens, and both move if you see them early.

SPA M&A: the four blocks that set the final number

Strip out the definitions and the signature pages and an acquisition SPA has four load bearing parts. They are negotiated by different people in different weeks, and the interaction between them decides what you receive.

The first is the price definition. Enterprise value less net financial debt, cash free and debt free, or a flat equity price. In investment banking terms this is the equity bridge, and in the SPA it stops being a spreadsheet and becomes an obligation with a formula attached. Net debt is the usual battleground: factoring, lease liabilities, deferred tax and the dividend you took in March all have a case for sitting on either side.

The second is the adjustment mechanism, which allocates the change in the business between the last accounts everyone studied and the day the shares move. The locked box has become the common mechanism on European deals, and on the prepared Belgian sell-side processes we run it is the working default, with completion accounts the realistic alternative. A locked box fixes the price on a historic balance sheet and moves the argument to leakage, while completion accounts hand the buyer a post closing calculation and with it the working capital target inside the equity bridge. Sellers who agree the mechanism late tend to agree it badly.

The third is the warranty and indemnity architecture. Warranties are statements of fact about the company, given at signing and often repeated at closing. Indemnities are a different animal: a euro for euro promise on a known risk, usually with no cap and no threshold. In practice the disclosure letter decides which is which: a warranty qualified by fair disclosure of the problem gives the buyer nothing. A seller's real protection is rarely a shorter list of warranties; it comes from a disclosure exercise done properly, with the data room index as its backbone.

The fourth is the liability regime, and sellers read it last when they should read it first. De minimis, basket, cap, survival periods, exclusivity of remedies, and where the money to pay a claim comes from. Those lines set your worst case, and limiting your exposure as a Belgian seller is a drafting exercise rather than a matter of goodwill.

The difference between an SHA and an SPA

The two get confused because they are often signed on the same day at the same table. An SPA is a single transfer: it moves shares, fixes the price, allocates historic risk, and once the adjustment is settled and the warranties have expired it is spent. An SHA governs the continuing relationship between the people who own the company afterwards, covering board composition, reserved matters, transfer restrictions, drag and tag rights and leaver terms.

The distinction bites the moment you are not selling everything. In a partial sale, or where management reinvests alongside a private equity buyer, the SPA prices what you sell today and the SHA sets the rules for what you keep, including at what price it is bought out later. It is entirely possible to win a strong price in the SPA and hand it back in the SHA through a leaver clause. Negotiate SPA and SHA as one package, or one of them will be worse than you think.

Belgian company law then adds a step that pure contract drafting misses. In an SRL, article 5:63 of the Belgian Companies and Associations Code subjects a share transfer, unless the articles provide otherwise, to the approval of at least half of the shareholders holding at least three quarters of the shares, excluding the shares being transferred. A signed SPA that ignores the articles or an existing shareholders' agreement creates an obligation without a valid transfer, so SHA and SPA have to be read against the articles before signature. In an SA shares are freely transferable by default, so any restriction sits in the articles, the terms of issue or the shareholders' agreement.

What is negotiable, and what is not

Nearly every number in the liability section moves. The underlying exposure does not, because facts and law set that.

• A de minimis and a basket are close to standard on Belgian mid market deals, and you should have both.
• The cap is the most valuable single line for a seller. A cap set well below the purchase price is the usual outcome on the deals we see, which makes a request for a full price cap an opening bid to push back on.
• A survival period cuts down something very long: absent a contractual limit, a personal action in Belgium prescribes only after ten years under article 2262bis, paragraph 1 of the former Civil Code, which stays in force because the reform did not move the limitation periods into Book 5 of the new Civil Code. Survival periods running beyond twenty four months are the exception rather than the rule on the deals we see.

Tax and social security warranties are the exception. A buyer will ask for cover that runs for as long as the authorities can still reassess, and that reach is materially longer than the survival period agreed for the business warranties. The applicable periods were changed by recent legislation, so have them checked with a tax adviser for the specific years in question rather than assumed. The commercial consequence holds whatever the answer is: a seller who caps everything at eighteen or twenty four months should expect the tax and social security line to be carved out of that cap. Argue instead about which identified risks carry a specific indemnity and whether an escrow covers the tax line so your own signature does not.

Recourse is negotiable in a different sense: not how much, but from where. Dedicated security for warranty claims is the exception rather than the rule, so an escrow is neither automatic nor free. The cheapest recourse for a buyer, and the most expensive for you, is set-off against deferred consideration, because a disputed claim becomes a payment you simply never receive. If part of your price sits in an earn-out bridging a valuation gap, the set-off clause deserves as much attention as the earn-out formula.

The sequencing that protects the price you agreed

Put the mechanics in the letter of intent, not only the price. The completion mechanism, the locked box date, the net debt definition, the cap, the survival periods and the recourse all belong there in a line each. Exclusivity granted against a bare number is exclusivity granted for nothing, and once the buyer holds it the drafting drifts one way.

Run the disclosure exercise alongside due diligence rather than after the draft SPA lands. Every answer given in the data room is a candidate disclosure, and a seller who keeps that record produces a disclosure letter in days instead of a fortnight of argument about what the buyer already knew.

Then hold the pen if you can. In a competitive process the seller's counsel issues the first SPA draft with the process letter, and the negotiation starts from your definitions and your cap. In a bilateral deal the buyer drafts, and you pay for six weeks of moving positions that would never have existed. Either way, the gap between signing and closing is a negotiation of its own, because conditions precedent, repetition of warranties and leakage in the meantime all live there.

The dups approach

What we hand back on an SPA mandate is a marked-up draft with a euro figure written next to every liability line: what each item in the net debt definition is worth against the bridge, what the cap costs you at each level a buyer will realistically accept, and how much of the consideration a twenty four month survival period leaves unspent until the second anniversary. The same team defends the net debt definition and built the model behind it, so nothing gets given away in a clause by someone who no longer remembers what the item was worth in the spreadsheet. On Full Deal Execution mandates we issue the first SPA draft and assemble the disclosure file while due diligence is still open.

Under Specialist Support the decision is narrower and usually urgent. Of everything your counsel has flagged on the buyer's draft, which two or three positions actually change what you keep? We price each one in euros rather than in adjectives, rank them in that order, and say which of the rest to concede in writing so the remaining time goes to the lines that decide the outcome.

Exclusivity granted on a headline number with none of the mechanics agreed is the first place this goes wrong. The day a draft SPA lands is the second. Start a first conversation with our team and you will get a clause by clause reading of where this price is set to leak.

Questions entrepreneurs ask about the SPA

What is an SPA in M&A?

An M&A SPA is the contract that transfers shares in a company from seller to buyer. Formally a share purchase agreement, often written as SPA agreement even though that repeats itself, it fixes the price and the payment mechanism, allocates historic risk through warranties and indemnities, and caps what the seller can be asked to pay back afterwards.

What is the difference between an SHA and an SPA?

An SPA is a one off transaction document: it sells shares, sets a price and allocates historic risk. A shareholders' agreement, or SHA, governs the ongoing relationship between owners after the deal, covering governance, reserved matters, transfer restrictions and exit rights. In a partial sale you sign both, and the SHA usually decides what your remaining stake is eventually worth.

Who writes the first SPA draft and how long does it take to negotiate?

Whoever has leverage. In a competitive sell-side process the seller's counsel issues the draft, which is a real advantage. In a bilateral deal the buyer drafts. Negotiation on a Belgian mid market deal usually runs four to eight weeks from first draft to signature, and longer where the disclosure exercise was not prepared during due diligence.

Pierre-Alexis Léonard, CEO at dups