LOI and SPA in International Deals: Key Aspects When Combining CEE Companies
From a handshake to a signed deal, two documents lead the way: the LOI and the SPA. Understanding what each sets out and where the risks lie is essential for any cross-border CEE deal.
What this guide covers
1. LOI: the letter of intent2. Between LOI and SPA: due diligence3. SPA: the share purchase agreement4. Cross-border nuances1. LOI: the letter of intent
The LOI (Letter of Intent) sets out the deal's core terms before detailed due diligence: price (or price formula), structure, exclusivity and timeline. Most of an LOI is not legally binding (except confidentiality and exclusivity) but sets the tone and direction.
2. Between LOI and SPA: due diligence
The LOI is followed by due diligence. Findings may adjust price or terms. This is exactly where a prepared data room and clean financials decide whether the deal moves smoothly or stalls.
3. SPA: the share purchase agreement
The SPA (Share Purchase Agreement) is the final, binding contract. Core elements: price and price adjustments, representations and warranties, indemnities, and conditions before and after closing.
4. Cross-border nuances
FAQ
What's the difference between an LOI and an SPA?
The LOI sets out core terms before due diligence and is mostly non-binding (except confidentiality/exclusivity); the SPA is the final, legally binding purchase agreement.
What matters most in an SPA?
Price and price adjustments, representations and warranties, indemnities, and conditions before and after closing.
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