For most SME owners, selling a business is a once-in-a-lifetime event. It’s high-stakes, highly emotional, and often legally complex. One of the most critical documents in the process is the Share Purchase Agreement (SPA).

The SPA is the formal legal contract that transfers ownership of a company’s shares from the seller to the buyer. It’s typically drafted by the buyer’s solicitor, but it defines rights, responsibilities, and risks for both parties. For sellers, understanding the contents of the SPA isn’t just useful,  it’s essential.

Below, we unpack five key clauses every seller should understand before signing on the dotted line.

1. Purchase Price and Payment Terms

Let’s start with the obvious: how much are you getting, and when?

The SPA sets out the purchase price and crucially how it will be paid. For many sellers, this includes more than just a lump sum on completion. You may see:

• Deferred consideration (e.g. payments spread over months or years),
• Earn-outs (where part of the payment depends on future performance), or
• Retention/escrow amounts (where the buyer withholds part of the payment for a fixed period).

These mechanisms are common and not inherently bad, but they come with trade-offs. Earn-outs, for instance, may give you a higher total price but often mean staying involved in the business post-sale under terms not of your choosing. Retentions can feel frustrating, especially if you feel you’ve delivered a clean exit.

Our advice: negotiate clarity, simplicity, and where possible certainty. Sellers thrive on firm terms and minimal post-sale entanglements.

2. Warranties

Warranties are statements of fact about the company you’re selling. They might include assertions like:

• The company owns all its assets.
• It has no undisclosed liabilities.
• All tax filings are up to date.
• There are no outstanding legal disputes.

The buyer relies on these to gain comfort about the business. If any statement proves false after the sale, you may be liable for damages,  unless you’ve properly disclosed the issue in a separate disclosure letter.

For sellers, this is where risk creeps in. A standard warranty schedule can run to dozens of pages, and the obligations don’t end at completion.

Key things to watch for:

• Don’t accept warranties that cover areas you genuinely can’t vouch for.
• Always provide full disclosure — vague or incomplete answers can lead to disputes.
• Ensure there are limitations on how long and how much you can be liable for (more on that below).

3. Limitations on Liability

Most SPAs include provisions that limit the seller’s exposure under the warranty clauses. These are not automatic, they must be negotiated,  and they can make or break your post-sale peace of mind.

Typical limitations include:

• Cap: The maximum amount the buyer can claim (often the total purchase price, but sellers may push for less).
• Time limits: How long the buyer must bring a claim (usually 6–24 months for most matters, longer for tax-related warranties).
• De minimis and basket thresholds: Minor claims are either ignored (de minimis) or only actionable once they reach a certain value (basket).

Without these limits, you could theoretically be pursued years later for a technical breach of a warranty clause, even after you’ve moved on.

Negotiating robust limitations is one of the most valuable things your adviser can do for you.

4. Completion Conditions

Most sellers expect that once the SPA is signed, the deal is done. But that’s not always the case. Some SPAs include completion conditions requirements that must be satisfied before the transaction formally completes.

These could include:

• Securing third-party consents (e.g. from landlords, regulators, or key customers).
• Delivering final accounts or other documentation.
• Internal company actions (e.g. board resolutions or share transfers).

If conditions are not met, the buyer may be entitled to delay or even walk away. Worse still, the seller may still be bound by exclusivity or subject to costs already incurred.

To protect yourself:

• Understand which conditions are within your control.
• Push for as few conditions as possible.
• Avoid conditions that give the buyer an easy exit.

5. Restrictive Covenants

Buyers don’t just purchase your business they also want to protect it after you’re gone. That’s where restrictive covenants come in.

These clauses prevent you from:

• Competing with the business for a set period,
• Poaching customers, suppliers, or staff,
• Using the brand or confidential information.

From the buyer’s point of view, these are perfectly reasonable,  they’ve just paid a premium for your goodwill and want to preserve it. But for sellers, the detail matters.

Be clear on:

• Scope: What activities are restricted?
• Duration: How long do the restrictions apply? (2–3 years is typical)
• Geography: Is the restriction local, national, or global?

A poorly worded clause can prevent you from earning a living in a related field, or even from working with businesses you helped grow.

Final Thought

A Share Purchase Agreement is not just a legal formality;  it’s a risk document. And for sellers, every clause is either protecting you or exposing you.

Understanding the mechanics of the SPA , especially these five clauses,  puts you in a stronger position to negotiate fairly and exit cleanly.

At Barnsgate Solutions, we work with sellers to ensure the final agreement reflects not just legal requirements, but commercial reality. Because peace of mind isn’t just about what you get for your business ,  it’s about knowing you’ve sold it well.