Negotiation of Transaction Terms (LOI, SPA and Shareholders' Agreements)

• The Letter of Intent (Letter of Intent, LOI),
• The agreement for the acquisition of 100% of the share capital of the target company (Share Purchase Agreement, SPA), et
• The Shareholders' Agreement (Shareholders’ Agreements).

Careful negotiation of these contractual instruments allows for the identification and proactive management of potential sources of conflict, the framing of price adjustment mechanisms, and the assurance of lasting relationships between parties post-transaction.

1- The Letter of Intent (LOI)

The LOI is a document preceding the signing of the transaction. It formalizes the essential points of the agreements between the parties, while defining the framework for negotiations. Its objectives include:

• Determining the scope of the transaction and, where applicable, the financial conditions surrounding the operation concerned;
• Identifying the conditions precedent essential to the operation, defining the scope and extent of due diligence, as well as the financing arrangements for the operation;
• Establishing an indicative timeline for the completion of the transaction;
• Defining the main terms and obligations to be included in the final contractual documentation;
• Specifying the confidentiality and exclusivity commitments applicable during the negotiation phase.

The LOI is generally not binding on all terms, but certain clauses may have immediate legal effect, such as confidentiality, exclusivity, or the payment of a termination fee.

2- The agreement for the acquisition of 100% of the target company's shares (SPA)

In an acquisition transaction, the SPA is the central document, legally and economically structuring the purchase of shares or assets and defining the rights and obligations of the parties until closing. Several key points are to be negotiated : 

• Price adjustment mechanisms based on performance, company cash flow, liabilities, or earn-out mechanismsearn-out ;
• Asset and liability guarantees, first demand guarantees ;
• Non-compete and exclusivity clauses ;
• Conditions precedent and post-closing obligationsclosing ;
• Indemnification and limitations of liability, caps, statutes of limitation, and exclusions.

The negotiation of the SPA requires in-depth technical expertise, as the precise drafting of each clause directly impacts the legal and contractual security, as well as the taxation of the transaction.

3- The Shareholders' Agreement

The shareholders' agreement governs the governance and relations between shareholders after the transaction is completed, particularly in cases of shared or minority control. Key issues include:

• Governance and voting rights, appointment of corporate bodies, quorum and majority rules for certain decisions;
• Liquidity and exit clauses, pre-emption rights, approval rights, tag-along, drag-along, etc. ;
• Shareholders' rights and obligations during the company's life;
• Conflict management, dispute resolution mechanisms, etc.

Shareholders' agreements must be consistent with the SPA and anticipate future group developments, thereby ensuring stability and predictability in relations between partners.