What is Stock Purchase Agreement?
Stock Purchase Agreement
A Stock Purchase Agreement (SPA) is the definitive contract governing the purchase and sale of startup stock by investors, containing representations and warranties.
Why It Matters for Startups
Governs the legal rights and ownership distribution of the entity; configuring Stock Purchase Agreement is critical for managing long-term cap table health and alignment during fundraising round closures and equity transactions.
Detailed Deep Dive
The Stock Purchase Agreement (SPA) is the binding contract of a priced funding round. It outlines transaction terms, pricing, and company disclosures, finalizing the equity purchase.
Frequently Asked Questions
Q:What are reps and warranties in an SPA?
Legal statements by the startup confirming the accuracy of its financial records, tax filings, and intellectual property ownership.
Q:Is an SPA binding?
Yes. Once executed by both parties, the SPA is the binding contract that executes the stock sale.
Quick Facts
- CategoryLegal
- Key ApplicationFundraising round closures and equity transactions
Coverage Trend12 Weeks
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