What is a Stock Purchase Agreement?

A stock purchase agreement is the primary transaction document for a stock acquisition (PDF available for download at the conclusion of this post). The purpose of the stock purchase agreement is to confirm the price paid for the securities sought, to control risk to the degree possible and to provide a roadmap for the hold period. 

The two most important variables in any investment are price and risk. It is said that the best way to control risk is through price, but that assumes you know precisely what you are buying and how you are protected in the event that there is a misrepresentation about the assets acquired or liabilities assumed. 
 
For this reason, the bulk of this document deals with identifying variables that could put the investment at risk, and detailing how the parties can protect themselves in the event that they are exposed to loss. Beyond price, parties should be aware of three primary concepts:
  1. Representations and Warranties
  2. Covenants
  3. Indemnification
As the PDF available for download will explain, these three items focus on the assurances and promises made so that the parties can comfortably enter into a transaction, and the protections available to them in the event of a breach.
 
PDF Commentary:
 
The purpose of this document is to provide an outline of the stock purchase agreement with some context to make the document easier to digest. 
 
On the pages that follow, each primary section of the purchase agreement (referred as an article) will be introduced with simple language (no legalese). Beneath each introduction you will find links that provide additional detail on the article described (this portion of the document is a work in process; more links will be added in the future). 
 
This approach facilitates an introduction to this document in as few as five pages. It also provides a framework that can be revisited when a particular topic or concept requires review without having to navigate a dense legal document.  
 
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