Purchase agreement (APA/SPA)

Definition

The binding contract that governs the sale and any later dispute.

Why It Matters

This is where the letter of intent stops being a handshake and becomes enforceable, and the clauses that decide who pays for a problem found after the money moves are buried well past the price. Read the indemnification, the survival periods, and the working-capital true-up first, in that order, because those three carry most of the money at risk. Everything agreed informally during diligence counts for nothing unless it appears here.

In numbers: A $4M asset deal's purchase agreement runs long past the LOI's two pages: the price, what conveys, the reps about the business, the indemnities behind them, and every closing condition, each negotiated by counsel.