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Comprehensive legal and tax support for your acquisitions and sales of businesses with a significant real estate component.

The Share Purchase Agreement (SPA)

The Share Purchase Agreement (SPA)

A Share Purchase Agreement (SPA) is a central document in transactions involving the sale of shares. The key functions of the SPA include:

Detailing the terms of the transaction: The SPA should define what is being purchased, by whom, for how much, and any other responsibilities and obligations related to the transaction. Stating the conditions of the transaction: Sometimes, the completion of the sale may be subject to certain events, such as obtaining shareholder approval or regulatory clearance.

Mitigating transaction risks: The buyer often seeks comprehensive warranties and indemnities in the SPA to ensure contractual protection against undisclosed risks or underestimated liabilities.

Protecting the buyer against post-transaction competition: The buyer typically imposes contractual restrictions (restrictive covenants) on the seller to prevent them from establishing a competing business after the transaction.

Structure and Content of an SPA

In bilateral transactions, the initial draft of the SPA is typically prepared by the buyer. On the other hand, in a competitive sale process, the SPA is usually drafted by the seller’s lawyers as the seller leads the competitive process. This means that the initial draft of the SPA will likely be more favorable to the seller, with less difficult seller warranties and broader limitations of liability.

Although there is no legal requirement for an SPA to follow a specific form, most SPAs include the same basic provisions and follow a similar order:

Parties involved.

  • Agreement to buy and sell shares.
  • Cost and payment mechanisms, often subject to adjustments or earn-out provisions.
  • Closing conditions, such as shareholder approval, acquisition financing, and regulatory clearances.
  • Closing procedures and deliverables.
  • Seller’s pre and post-closing obligations.
  • Buyer protection provisions.
  • Seller’s limitations of liability regarding warranties and indemnities.
  • Confidentiality and notice clauses.
  • Standard provisions (such as specific performance, termination, assignment, amendments, cost, and entire agreement).
  • Applicable law and jurisdiction.
  • Electronic signature clause.
  • Date and signature blocks.

Additionally, the SPA may contain several appendices or related documents:

Warranties in SPAs

The warranties provided by the seller in an SPA are typically drafted in broad and absolute terms. It is unlikely that all warranty statements are entirely true and accurate.

To the extent the seller is aware of any matter or circumstance that renders any of the warranties untrue, it is customary for the seller to record this information in a disclosure schedule. The buyer generally agrees in the main body of the SPA that no liability arises under the warranties when information has been properly disclosed in this manner.

In the disclosure schedule, the seller usually specifies that the warranties are subject to the official disclosure of certain facts, with the purpose of the buyer agreeing not to bring claims or seek compensation based on these disclosed facts. Disclosures are typically presented in an appendix or schedule attached to the SPA.

Alternatively, disclosures can be made in a separate disclosure letter. This practice is less common in France but may occur when a foreign party is involved.

In processes with competitive bidding, the entire data room and the seller’s due diligence reports are considered disclosures against the warranties.

Seller disclosures serve two key purposes:

  • Provide additional information to the buyer about the target company. The disclosure process often reveals additional information that may not have been provided during the buyer’s due diligence.
  • Protect the seller from warranty claims regarding the disclosed facts.

Contractual Specifics for the Sale or Acquisition of a Company with Real Estate Component

In the sale of a real estate company, it is customary for the buyer to receive certain contractual warranties from the seller for a defined period. These warranties typically cover:

  • The financial position of the company at the time of the transfer, as reflected in the annual accounts or interim financial statements used to calculate the provisional purchase price.
  • Any unforeseen financial implications for the acquired company. This could include events or situations prior to the transfer that were unknown at the time but subsequently materialize, resulting in an increase in liabilities or a decrease in assets compared to the reference accounts. Tax adjustments and legal disputes are examples of such implications.
  • Various statements made by the seller concerning the company, including its assets and liabilities.

To ensure the effectiveness of these warranties, they should be carefully drafted considering the following key points:

Defining the guaranteed risks.

  • Identifying the beneficiary of the warranty and the type of compensation.
  • Determining the assessment of damages. Securing payment of the compensation.

The seller often provides representations and warranties regarding both the acquired company and its real estate assets.


It is also advisable for the seller to negotiate certain elements such as the duration of the warranty agreement, a deductible, a threshold for triggering liability, and a cap beyond which the seller is no longer responsible.


Our legal services in real estate law aim to secure and optimize your mergers, acquisitions, and business sales from a legal and tax perspective

Drafting of preliminary agreements

Establishment of the ‘Term Sheet’

Consider drafting a summary of the key terms of the proposed transaction, sometimes referred to as a term sheet, letter of intent, heads of terms, letter of intent, or memorandum of understanding. You will need to decide whether this document will be non-binding, partially binding, or fully binding.

Confidentiality Agreement

Before any confidential information about the target entity is disclosed to the buyer, a protective confidentiality agreement, also known as a non-disclosure agreement, is typically established by both parties to secure the data.

Exclusive Negotiation Agreement

Is the seller willing to grant the buyer an exclusive negotiation period? If so, an exclusive negotiation agreement (also known as a lock-out or non-solicitation agreement) should be signed by both parties.

Documentation review

The seller’s attorney is responsible for gathering all necessary property-related information for audit purposes and organizing this data in a data room.

Data rooms prepared by attorneys typically contain a wide variety of documents and specific details related to the building or transaction.

This may include detailed building plans, contracts related to the operation and maintenance of the building, historical property deeds, information on easements and mortgages, details about the condominium, urban planning certificates, environmental and contamination reports, information on leasing situations and tax documents, and information on insurance, construction work, and any ongoing litigation. The specific content of each data room may vary depending on the unique characteristics of the property and the transaction.

The review has various components, including environmental aspects: a technical report related to environmental issues (pollution, classified facilities for environmental protection, etc.). Information from public databases related to soil pollution and previous operations of classified facilities (these public databases are called BASOL and BASIAS). A schedule of natural risks, seismic risks, and technology-related risks for buildings located in an area covered by a plan to prevent such risks.

Coordination of the parties

FRELA offers comprehensive services during the process of mergers, acquisitions, and business sales. Our attorneys will accompany you to optimize and secure your transactions, providing coordination and oversight of the actions taken by the parties involved.

Firstly, we will listen to you to understand your project and needs. With this information, we will proceed with coordinating the parties. We will review the documents presented and provide advice on the necessary steps. Our goal is to give you a clear overview of the operation, save you time, and minimize your travel with our signature representation and negotiation solution.

Review of the acquisition contract

FRELA provides contract review services for your SPA (Share Purchase Agreement). We ensure the security and optimization of your sales and/or acquisition contracts according to your needs. FRELA helps you prevent disputes, understand tax and legal constraints, and consider your obligations and rights.

Mergers, acquisitions, and business sales should be concluded through a written agreement, such as a real estate purchase contract, acquisition agreement, or SPA. The buyer submits an offer to the seller, who can then decide whether to accept or reject it.

Tax structuring of your mergers, acquisitions, and business sales.

  • Analysis of individual tax situation: individuals, shareholders, entrepreneurs, executives
  • Legal and tax analysis of the target company for acquisition or sale
  • Assistance in the context of disputes and litigation
  • Tax domicile transfer
  • Implementation of estate planning and donation schemes
  • Advice on the creation and establishment of dedicated companies, REIT (Real Estate Investment Trusts), and specific French or foreign structures to meet your optimization objectives: civil companies, foundations, co-ownership, trusts.

Drafting of urgent agreements

FRELA assists you in drafting the content of your urgent agreements.

In cases of tight deadlines, ensuring the security and optimization of your urgent agreement drafts is essential to protect your interests. Business transactions should be concluded through a written agreement, such as a real estate purchase contract, also known as an acquisition agreement or SPA (Share Purchase Agreement). The contract should include a number of rights and obligations for both the buyer and the seller. The contract is deemed accepted upon signature, payment of all or part of the price, commencement of the fulfillment of obligations, and it will bind the parties legally.

Creation of Real Estate Investment Trusts (REIT) and articles of association drafting

A real estate company, known as a Real Estate Investment Trust (REIT) or Real Estate Management Company, is a company whose purpose is real estate.

The REIT offers numerous advantages: with the drafting of adapted bylaws, it allows stipulating the rights of each shareholder regarding the real estate property and the terms of sale. The REIT also enables the optimization of the taxation of the acquired property by deducting a portion of the purchases and expenses related to maintenance and renovations. Additionally, the REIT provides tax optimization benefits during successions and donations.

Creation of dedicated companies for mergers, acquisitions, and business sales.

The creation of dedicated companies can be advantageous in terms of management and tax optimization.

Among other benefits, with the drafting of appropriate bylaws, these companies allow for the specification of the rights of each associate regarding the real estate property and the terms of sale. The establishment of dedicated companies also enables the optimization of taxation on the purchased property by deducting a portion of the expenses related to maintenance and renovations. Additionally, a dedicated company, such as a SCI (Société Civile Immobilière), allows for tax optimization in the context of successions and donations.

Contact us and present your project for the acquisition or divestment of real estate or businesses.


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