Issues arising where there is split exchange and completion—share and asset purchases
Issues arising where there is split exchange and completion—share and asset purchases

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Issues arising where there is split exchange and completion—share and asset purchases
  • Conditions to completion
  • Why conditions may be necessary
  • Satisfying the conditions—responsibility and consequences
  • Long-stop date for satisfaction of the conditions
  • Repetition of the warranties and updating disclosures
  • Pre-completion undertakings of the seller
  • Termination prior to completion
  • Termination for failure to satisfy conditions
  • Buyer's right to terminate for breach of warranty
  • More...

This Practice Note describes the legal issues that may arise where there is a gap in time between exchange/signing (at which time the share purchase agreement (SPA) or asset purchase agreement (APA) is signed) and the later completion of the acquisition. At completion, the documents required to transfer title are executed and handed over to the buyer, meaning that the buyer acquires legal ownership of the company (in the case of a share purchase) or business/assets (in the case of an asset purchase) it is acquiring (the target). This gap in time may be a matter of a few days or a few months, depending on the nature of the reasons why completion is to be delayed.

Split exchange and completion is very common, but should only take place where there is a distinct reason for it; one or more conditions that must be fulfilled after the SPA/APA has been signed and before the transaction can take effect at completion (see brief summary in 'Why conditions may be necessary' below). In many transactions, exchange and completion will occur simultaneously. Simultaneous exchange and completion is preferable for the buyer, since it means the buyer takes immediate control of the target business and therefore does not bear certain legal and financial risks that may arise where, post-exchange, legal title and operational control of the target remains with

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