In an M&A transaction, the SPA usually concentrates a significant part of the negotiation. However, especially in small-market transactions, the real balance of the deal also depends on other documents that structure the continuity of the business after closing.
In small-market M&A transactions, the focus of the negotiation is usually placed on the sale and purchase agreement. In practice, however, the economic and legal balance of the transaction rarely ends with the SPA. The real value of the transaction is usually built through a set of interrelated agreements which, when considered together, articulate the transfer of the business, its continuity and the future alignment of the parties.
Shareholders’ agreements, management agreements, transitional services agreements, leases and other operational contracts are not ancillary documents in a minor sense. In small-market transactions, where personal and operational dependence is particularly intense, these instruments are often decisive to preserve the value of the business after closing. Treating this documentation as a mere supplement to the SPA tends to create imbalances that usually become apparent in the post-closing phase.
| Document | Main function | Risk if poorly coordinated |
| SPA | Regulates the transfer, price, representations and warranties, and risks linked to the past. | Overloading it with post-closing obligations or mixing liability regimes. |
| Shareholders’ agreement | Structures future coexistence, corporate governance, reinforced majorities, exits and deadlocks. | Reopening matters already settled in the SPA or creating contradictions between remedies. |
| Management or founder agreements | Regulate retention, functions, incentives, non-compete undertakings and future involvement. | Extending personal commitments to sellers who are only divesting. |
| Operational agreements / TSA | Facilitate an orderly transition and preserve business continuity. | Creating indefinite dependency or leaving critical issues outside the contractual perimeter. |
The sale and purchase agreement performs a clearly defined function: regulating the transfer of shares or assets, the price and the allocation of risks linked to the past. In small-market transactions, this function must be understood as part of a broader contractual architecture, but it should not be diluted by incorporating undertakings that respond to different legal logics. In this respect, the correct configuration of warranties in share purchase agreements (SPAs) is particularly relevant as a tool for allocating the residual risk of the transaction.
This separation is not merely functional but systematic, as the SPA and the shareholders’ agreement respond to different liability regimes. The SPA structures an essentially indemnity-based system, linked to closing and to the correction of deviations from what was agreed, whereas the shareholders’ agreement is intended to regulate ongoing relationships and structural control mechanisms after closing.
From this perspective, overloading the SPA with obligations that belong to the post-closing phase not only complicates its interpretation, but may also lead to inappropriate or directly ineffective enforcement mechanisms.
Where the seller remains in the share capital, the shareholders’ agreement to protect investment and prevent conflicts becomes the central instrument for regulating the shareholders’ relationship after the transaction. In small-market transactions, its content is usually more limited than in larger transactions, but it concentrates particularly sensitive issues: corporate governance rules, reinforced majorities, exit mechanisms, dividend policy or deadlock scenarios.
Proper coordination with the SPA is essential to avoid overlaps or contradictions. It is not unusual to find shareholders’ agreements that reopen matters already settled in the sale and purchase agreement, or SPAs that incorporate commitments that actually belong to the future relationship between shareholders. These overlaps introduce unnecessary friction into the liability regime and the application of contractual remedies.
From a technical perspective, the separation between both instruments responds to the need to keep the liability regimes applicable at each stage of the transaction coherent, clearly separating risks relating to the past from the organisation of the project going forward. Where the shareholders’ agreement includes reinforced majorities, exit mechanisms or deadlock scenarios, it may also be useful to review contractual mechanisms for resolving corporate deadlocks.
In many small-market M&A transactions, the value of the business is closely linked to the continuity of certain key individuals. Senior management agreements, retention arrangements and non-compete clauses are not, in these cases, ancillary elements, but essential components of the economic proposal of the transaction.
From a technical perspective, it is particularly important to determine where these commitments are documented. In structures involving several sellers, where only one of them remains linked to the project after closing, it is essential to correctly individualise personal commitments. The indiscriminate inclusion of retention or non-compete commitments in the SPA may alter the liability regime of sellers who are merely divesting and have no involvement in future management.
Practice suggests documenting these commitments in specific agreements with the person concerned, thereby preserving the coherence of the SPA and avoiding an unjustified extension of liability among parties with clearly differentiated economic and functional positions.
Together with the SPA, the shareholders’ agreement and management agreements, small-market transactions commonly involve other agreements required to ensure an orderly transition of the business, such as transitional services agreements, leases of properties not transferred or certain agreements with the seller or related companies.
These agreements perform a clear value-preservation function and allow the buyer to assume control without immediate operational disruption. However, their design requires particular care. If poorly coordinated, they may introduce inconsistencies into the overall contractual package and make it more difficult to properly articulate and enforce the agreed compliance and reaction mechanisms.
As a practical criterion, before closing the documentation of a transaction it is useful to review whether each obligation has been placed in the appropriate instrument and whether the overall contractual package remains coherent.
In small-market M&A transactions, the price agreed in the SPA does not merely remunerate the transfer of an asset or shares. It remunerates a set of interdependent legal and economic commitments which, taken together, form the true proposal of the transaction. Retention, non-compete undertakings, transitional services, alignment of interests or certain post-closing limitations form part of the economic balance reached by the parties, even if they are documented in different instruments.
From this perspective, the transaction cannot be analysed as a sum of autonomous contracts. Each document performs a specific function within a common logic of allocating risks, incentives and responsibilities. Proper coordination between the SPA, the shareholders’ agreement, management agreements and the rest of the operational agreements is not a formal matter, but a structural one: it determines which commitments each party assumes, towards whom and under which liability regime.
In particular, the proper contractual location of each obligation is essential to avoid undue extensions of liability, overlapping remedies or ineffective enforcement mechanisms. A well-designed contractual architecture is not the most complex one, but the one that accurately reflects the economic reality of the transaction and allows the project to operate normally once closing has taken place. For further context on the stages of these transactions, see our practical guide to small-market M&A.
In addition to the sale and purchase agreement or SPA, shareholders’ agreements, management or founder agreements, transitional services agreements, leases and other operational agreements with sellers or related companies may be required.
Because the SPA is primarily designed to regulate the transfer, price, warranties and allocation of risks linked to the past. Future coexistence, retention or operational transition obligations usually require specific instruments.
Where the seller remains in the share capital or there are several shareholders after closing, the shareholders’ agreement regulates the organisation of the common project, corporate governance, reinforced majorities, dividend policy, exit mechanisms and deadlock scenarios.
They are particularly relevant where the value of the business depends on the continuity of certain key individuals. In these cases, retention, senior management, non-compete or incentive arrangements may be essential to preserve the acquired value.
They are agreements that allow the seller or a related company to continue providing certain services for a limited period after closing, in order to facilitate the transition of the business to the buyer.
It may generate overlapping obligations, contradictions between documents, undue extension of liability to sellers who do not participate in future management, enforcement difficulties and post-closing disputes.
It should be designed as a coherent package, allocating each obligation to the appropriate document and accurately reflecting which commitments each party assumes, towards whom, for how long and under which liability regime.
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