stock-purchase-agreement

Vocabulary Word

Definition

'Stock purchase agreement' is a detailed contract for buying and selling ownership portions of a company. It tells you how many shares are being sold, how much they are, and more about the sale.

Examples in Different Contexts

For private equity transactions, the stock purchase agreement specifies the number of shares being sold, the price per share, and other key terms. A private equity manager might explain, 'Our SPAs are meticulously drafted to address due diligence findings and allocate transaction risks appropriately.'

Practice Scenarios

Accounting

Scenario:

The acquisition has drastically altered our business's face value. What financial implications should we foresee for future estimations?

Response:

After the stock purchase agreement, the increased share capital needs to be reported in the balance sheet.

Business

Scenario:

We have reached a principal agreement to purchase all outstanding shares of XYZ Inc. We need to move ahead with the contractual formalities.

Response:

Our next step should be drafting a stock purchase agreement. It will outline the specifics of this deal including price and the number of shares involved.