A stock purchase agreement is a legal contract that outlines the terms and conditions under which one party (the buyer) agrees to purchase corporate stock from another party (the seller). The stock in question could be shares of a publicly traded company or private company. (Or, it could be a "membership interest" in a limited liability company - LLC.) In the typical small business ownership transfer, the corporate entity is NOT transferred and an asset Purchase Agreement ("APA") is used instead. Also, in the typical small business stock purchase, the buyer is acquiring 100% of all the outstanding shares (ownership interest). The agreement typically includes details about the stock being sold, the purchase price, any financing arrangements, and any conditions that must be met before the sale can be completed. It may also include provisions for warranties, indemnification, and other important issues. The purpose of a stock purchase agreement is to clearly define the rights and obligations of the buyer and seller and to protect the interests of both parties. It is important for both parties to carefully review and understand the terms of the agreement before signing, as it can have significant legal and financial implications. In addition to the stock purchase agreement, the parties may also enter into other related documents, such as a stockholders agreement or a voting agreement, which outline the rights and obligations of the parties as stockholders.
