The buyer acquires equity and the entity continues with its existing obligations. Unlike an asset purchase, liabilities transfer automatically, which shifts protection to representations, indemnification, and escrow.
Contract assignment consents are generally not required.
Alternative Names:
SPA|Equity Purchase Agreement
Why it Matters?
Because all liabilities transfer, the indemnification package rather than the purchase structure provides protection, which makes survival periods, caps, and baskets the negotiated allocation of unknown risk. Undisclosed liabilities discovered after closing are recoverable only within those limits. Avoiding third-party consent requirements is the structural advantage, though change of control provisions in key contracts frequently reintroduce the problem.
Frequently Confused with
Related terms
Frequently asked questions
What protects a buyer in a stock purchase?
What is the structural advantage?
