Stock Purchase Agreement Template (Free Sample)
A stock purchase agreement (SPA) is the contract under which a buyer buys shares of a corporation from its existing shareholders. In an acquisition the buyer usually buys all of the shares, so it takes over the company as a whole, with its assets, contracts, employees and liabilities, rather than picking particular assets. Below: how a stock purchase differs from an asset purchase and a merger, the clauses to include, the tax, securities and consent points to check, and a free sample short-form stock purchase agreement you can copy into Word.
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Install free in WordLast checked: 23 October 2026. This page is general information about United States law and practice, not legal advice. Corporate, tax, securities and antitrust rules depend on the company, the state, the parties and the size of the deal. Have qualified counsel, and a tax adviser, review a stock purchase agreement before it is signed.
What is a stock purchase agreement?
A stock purchase agreement records the sale of shares (stock) in a corporation by one or more selling shareholders to a buyer. The company itself is usually not the seller: its owners are. Because only ownership changes hands, the company keeps everything it had before closing, including its contracts, permits, bank accounts and employees, and also every liability, known or unknown. Much of a stock purchase agreement therefore deals with risk: what the sellers promise about the company, and who pays if those promises turn out to be wrong.
The same kind of document is used for smaller transactions too, such as one founder buying out another or an investor buying existing shares from a shareholder (a secondary sale). For the purchase of membership interests in an LLC the equivalent document is usually called a membership interest purchase agreement. When the company issues new shares to an investor, the transaction may use a stock subscription agreement or a stock purchase agreement; the company is the issuer and receives the investment. This page focuses on purchases from existing shareholders. In the UK, the usual term for the equivalent acquisition document is a share purchase agreement (see our share purchase agreement review guide under English law).
Stock purchase vs asset purchase vs merger
Buyers and sellers often start by choosing the deal structure, because it drives liability, consents and tax.
| Stock purchase | Asset purchase | Merger | |
|---|---|---|---|
| What the buyer gets | The shares, and so the whole company | Only the assets (and liabilities) listed in the agreement | The target combines with the buyer or a buyer subsidiary under state merger law |
| Liabilities | Stay with the company, so the buyer bears them indirectly; protection comes from representations, indemnities and escrow | Buyer generally takes only the liabilities it agrees to assume, subject to successor liability rules | The surviving company carries the target's liabilities |
| Who must sign or approve | Each selling shareholder signs (a problem with many or reluctant holders, unless a drag-along applies) | The company signs; board and usually shareholder approval for a sale of substantially all assets | Board and shareholder vote under state law; dissenting holders may have appraisal rights |
| Contracts and permits | Stay with the company, though change-of-control clauses may require consent | Each contract must be assigned, which often needs the counterparty's consent | Often transfer by operation of law, but anti-assignment and change-of-control clauses still need checking |
| Typical tax result | No step-up in the company's asset basis, unless a Section 338(h)(10), 338(g) or 336(e) election is available and made | Buyer gets a cost basis in the assets; seller may face corporate-level tax on a C corporation sale | Depends on the form; some mergers qualify as tax-free reorganizations |
If an asset deal fits better, see our asset purchase agreement review guide.
What to include in a stock purchase agreement: clause checklist
- Parties and shares: each seller, the buyer, the company (often a party for its own representations and covenants), and the number and class of shares each seller is selling.
- Purchase price and payment: the price, how it is paid at closing (wire, promissory note, buyer stock) and any part held back.
- Price adjustments: a cash-free, debt-free price with a working capital adjustment after closing, or a "locked box" price fixed on an earlier balance sheet, plus the dispute process for the closing statement.
- Escrow, holdback or earnout: part of the price held back to secure indemnity claims, or paid later if the business hits agreed targets. Define earnout metrics precisely; vague earnouts are a frequent source of disputes. See our escrow agreement template.
- Closing and deliverables: when and how closing happens, and what each side delivers: stock certificates with stock powers (or instructions to update the stock ledger for uncertificated shares), resignations, consents, payoff letters and the price.
- Sellers' representations: each seller's title to its shares, authority and no conflicts; and, about the company, organization, capitalization (all outstanding shares, options and convertibles), financial statements, undisclosed liabilities, taxes, material contracts, IP, employees and benefits, litigation, compliance and permits. Exceptions go in disclosure schedules.
- Buyer's representations: authority, financing, and that it is buying for investment and not with a view to distribution.
- Covenants before closing: run the business in the ordinary course, give access to books and records, seek required consents, and no shopping the company to other buyers (exclusivity) if agreed.
- Conditions to closing: representations still true, covenants performed, third-party and regulatory approvals obtained, no injunction, and no material adverse effect, if the parties agree to one.
- Indemnification: what each side must make good, how long representations survive, a basket (deductible or tipping), a cap, longer survival and higher caps for fundamental representations, and whether indemnity is the exclusive remedy. If the buyer takes out representations and warranties insurance, align the indemnity with the policy.
- Restrictive covenants: sellers' non-compete, non-solicit and confidentiality, sized to the business sold (see below).
- Tax matters: pre-closing taxes, cooperation on returns, transfer taxes, and any Section 338(h)(10) or 336(e) election.
- Termination: outside date, mutual termination, termination for breach, and any break fee.
- General terms: governing law and forum (often Delaware for Delaware corporations), notices, expenses, entire agreement, amendment, assignment and counterparts.
Legal points to check before signing
- Transfer restrictions in the company's documents. Bylaws, a shareholders' agreement or a stock restriction agreement may give the company or other holders a right of first refusal, require board consent, or let a majority drag along minority holders. Check them first and obtain waivers where needed.
- Securities law. Shares are securities, so a sale of shares, even a private sale between a few people, must comply with federal and state securities laws or fit an exemption. Private resales of restricted stock are often made in reliance on exemptions such as Section 4(a)(1) or 4(a)(7) of the Securities Act. Counsel should confirm the exemption and the state rules for the parties involved.
- Antitrust filings. Larger acquisitions may require a Hart-Scott-Rodino premerger notification and a waiting period before closing. The size-of-transaction threshold is adjusted annually; check the current threshold, other filing tests and exemptions with counsel.
- Tax elections. Certain qualifying stock transactions can be treated as asset sales for federal income tax through a Section 338(h)(10), 338(g) or 336(e) election. Eligibility, required consents and tax consequences differ. A Section 336(e) election requires a written agreement between the target and the required seller parties, including all shareholders of an S corporation target. Have tax advisers confirm eligibility, model the resulting tax and asset basis, and document who must consent and file.
- Non-competes. California generally voids non-competes but allows a reasonable one for a person who sells all of their ownership interest in a business, under Business and Professions Code section 16601. Delaware courts have recently refused to enforce, or rewrite, sale-of-business non-competes they found broader than the business acquired, so tailor the scope, territory and length.
- Change-of-control clauses. Some customer, supplier, lease, loan and license agreements let the other party consent to, or terminate on, a change of control. Review them in diligence; see our change of control clause review guide.
- Spousal consent. Where a selling shareholder lives in a community property state, the buyer may ask for the seller's spouse to consent to the sale.
Free stock purchase agreement template (sample text)
Copy the text below into Word and fill in the brackets. It is an original, general US sample of a short-form agreement for the purchase of all of the shares of a privately held corporation from its shareholders for cash, with a simple escrow. It suits a small, closely held company where the parties sign and close on the same day; a larger or regulated deal needs a fuller agreement with schedules, closing conditions and a disclosure process.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of [date] (the "Effective Date") among [Buyer legal name], a [State] [entity type] ("Buyer"); [Company legal name], a [State] corporation (the "Company"); and the shareholders of the Company listed in Exhibit A (each a "Seller" and together the "Sellers").
1. Sale and Purchase of Shares. On the terms of this Agreement, each Seller sells to Buyer, and Buyer buys from each Seller, the shares of the Company's [common stock] set opposite that Seller's name in Exhibit A (together, the "Shares"), which are all of the issued and outstanding shares of capital stock of the Company, free and clear of all liens, pledges, options and other encumbrances.
2. Purchase Price. (a) The total purchase price for the Shares is $[amount] (the "Purchase Price"), allocated among the Sellers as shown in Exhibit A. (b) At Closing, Buyer will pay (i) $[escrow amount] (the "Escrow Amount") to [Escrow agent] (the "Escrow Agent") to be held under an escrow agreement among Buyer, the Sellers' representative and the Escrow Agent (the "Escrow Agreement") as security for the Sellers' obligations under Section 7, and (ii) the balance of the Purchase Price to the Sellers by wire transfer, in accordance with Exhibit A. (c) [Optional: The Purchase Price assumes that the Company has no indebtedness and Working Capital of $[target] at Closing, and will be adjusted after Closing as set out in Exhibit B.]
3. Closing. The closing of the sale (the "Closing") takes place on the Effective Date [by electronic exchange of documents]. At Closing, (a) each Seller will deliver to Buyer the certificates for its Shares, duly endorsed or with stock powers duly executed in blank (or, for uncertificated Shares, instructions to the Company to record the transfer to Buyer), (b) the Company will deliver the resignations of the directors and officers named by Buyer, the consents listed in Exhibit C and payoff letters for any indebtedness, and (c) Buyer will pay the Purchase Price under Section 2(b). Closing and transfer of the Escrow Amount are conditional on delivery of the Escrow Agreement executed by Buyer, the Sellers' representative and the Escrow Agent.
4. Representations of Each Seller. Each Seller, as to itself only, represents to Buyer that (a) it has full power and authority, and if an entity is duly organized, to sign and perform this Agreement, and this Agreement is its valid and binding obligation; (b) it is the record and beneficial owner of its Shares, free and clear of all encumbrances, and on Closing Buyer will acquire good title to those Shares; and (c) signing and performing this Agreement does not breach any agreement, order or law binding on it.
5. Representations About the Company. The Company and each Seller make the following representations to Buyer, with the Sellers' liability allocated as provided in Section 7, except as set out in the disclosure schedule delivered with this Agreement (the "Disclosure Schedule"): (a) the Company is duly organized, validly existing and in good standing under the laws of [State]; (b) the Shares are all of the Company's issued and outstanding capital stock, were validly issued, fully paid and non-assessable, and there are no outstanding options, warrants, convertible securities or other rights to acquire any equity of the Company; (c) the Company's financial statements for [periods] delivered to Buyer fairly present its financial position and results in all material respects in accordance with [GAAP, consistently applied]; (d) the Company has no liabilities other than those reflected in those financial statements or incurred in the ordinary course since [balance sheet date]; (e) the Company has filed all tax returns required to be filed and paid all taxes shown as due; (f) there is no pending or, to the Company's knowledge, threatened litigation against the Company; (g) the Company has complied in all material respects with applicable laws; and (h) the Disclosure Schedule lists each material contract of the Company, and no consent of any counterparty is required for the sale of the Shares except as listed.
6. Representations of Buyer. Buyer represents that (a) it is duly organized and has full power and authority to sign and perform this Agreement; (b) it has funds available to pay the Purchase Price; and (c) it is acquiring the Shares for its own account for investment and not with a view to distribution, and understands that the Shares have not been registered under the Securities Act of 1933 or any state securities law.
7. Indemnification. (a) After Closing, the Sellers will severally (in proportion to their share of the Purchase Price), and not jointly, indemnify Buyer against losses arising from any breach of the representations in Section 5 or of the Company's covenants, and each Seller will indemnify Buyer against losses arising from any breach of that Seller's own representations in Section 4 or covenants. Buyer will indemnify the Sellers against losses arising from any breach of its representations or covenants. (b) Representations survive Closing for [18] months, except those in Section 4 and Sections 5(a), 5(b) and 5(e), which survive until [insert separately agreed survival deadlines]. A claim notified in writing with reasonable detail to the indemnifying party before the applicable survival deadline survives until finally resolved. Claims against the Sellers must be notified through the Sellers' representative; any claim against escrow must also comply with the Escrow Agreement's notice requirements. (c) Sellers are not liable under Section 7(a) for breaches of Section 5 until losses exceed $[basket] in total, and then [only for the excess] [from the first dollar], and their total liability for those breaches is capped at $[cap]. Buyer's indemnity claims against a Seller will first be paid from that Seller's remaining share of the Escrow Amount, subject to the Escrow Agreement and the allocation of liability in Section 7(a). A Seller-specific claim will not be charged to another Seller's share. Buyer must pay its own indemnity obligations directly. The Escrow Agreement must specify each Seller's share, claim and objection procedures, an agreed release date, retention for unresolved timely claims, and release of the remaining balance to the Sellers. (d) The basket, cap and contractual survival deadlines do not limit claims for fraud, which remain subject to applicable law. Except for fraud and claims for injunctive relief, this Section 7 is the exclusive remedy for breach of this Agreement after Closing.
8. Restrictive Covenants. For [number] years after Closing, no Seller will, directly or indirectly, (a) engage in a business that competes with the business of the Company as conducted at Closing in [territory], or (b) solicit any employee or customer of the Company to leave or reduce its business with the Company. Each Seller acknowledges that these covenants are reasonable and necessary to protect the goodwill Buyer is acquiring, and that they apply only to the extent permitted by applicable law.
9. Taxes and Expenses. The Sellers, severally in proportion to their respective shares of the Purchase Price, are responsible for the Company's taxes attributable to periods ending on or before Closing and the pre-Closing portion of any period spanning Closing, without double recovery for tax liabilities already reflected in a Purchase Price adjustment actually made under Exhibit B. For a period spanning Closing, allocate taxes using [insert the agreed allocation method]. If the parties omit Section 2(c) and Exhibit B, no Working Capital adjustment is assumed. [Transfer taxes are borne [equally] by Buyer and the Sellers.] Except as stated otherwise, each party bears its own expenses of this transaction.
10. Sellers' Representative. Each Seller appoints [name] as its representative to give and receive notices, settle claims under Section 7 and the Escrow Agreement, and take other actions for the Sellers under this Agreement.
11. General. (a) Governing law. This Agreement is governed by the laws of the State of [State], without regard to its conflict of laws rules, and the parties submit to the exclusive jurisdiction of the state and federal courts located in [county and State]. (b) Entire agreement. This Agreement, its Exhibits, the Disclosure Schedule and the Escrow Agreement are the entire agreement of the parties about its subject matter. (c) Amendment and waiver. Any amendment or waiver must be in writing and signed by Buyer and the Sellers' representative. (d) Assignment. No party may assign this Agreement without the consent of Buyer and the Sellers' representative. (e) Notices. Notices must be in writing and sent to the addresses in Exhibit A. (f) Counterparts. This Agreement may be signed in counterparts and by electronic signature.
[Signature blocks for Buyer, the Company and each Seller]
Exhibit A: Sellers, Shares, allocation of the Purchase Price, wire instructions and notice addresses. Exhibit B: [Working capital adjustment]. Exhibit C: Required consents.
Not legal advice. This sample is not tailored to any state, company or transaction. It does not cover regulatory approvals, employee equity, financing, a sign-and-close gap or a full disclosure process. The tax, securities and non-compete rules described above depend on the facts. Have qualified counsel and a tax adviser review the agreement before use.
Common mistakes in stock purchase agreements
- Not checking the capitalization. Unrecorded option grants, SAFEs, convertible notes or promised equity can mean the buyer does not get 100% of the company.
- Missing a selling shareholder. To acquire all outstanding shares by a stock purchase, the buyer needs every holder's shares to be transferred, whether voluntarily or through a valid drag-along process. Otherwise, the buyer will not acquire 100% of the company.
- Ignoring transfer restrictions. A right of first refusal or consent requirement in the bylaws or shareholders' agreement that is not waived can invalidate or delay the transfer.
- Vague price adjustments. Working capital targets and earnout metrics without defined accounting principles and a dispute mechanism are a common source of post-closing disputes.
- Indemnity with no money behind it. Without an escrow, holdback or insurance, the buyer may have to chase many individual sellers.
- Overbroad non-competes. A restriction wider than the business sold may be cut down or not enforced at all.
How to draft or review a stock purchase agreement in Word with LexDraft
LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the stock purchase agreement stays in the document you are already editing.
Describe the deal
Open LexDraft in Word and describe the transaction in plain English: the buyer, the sellers and the company, the shares, the price and how it is paid, any escrow or adjustment, the indemnity terms, the restrictive covenants and the governing law. LexDraft asks a few clarifying questions, then writes a first draft into your document as editable Word text.
Review it against the governing law
To review a stock purchase agreement you drafted, or one the other side sent you, pick the governing state and run a review. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated stock purchase playbook, so a stock purchase agreement runs as a general review. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
Check and accept the redlines
Run the defined-term and cross-reference checks, which are rule-based and run without AI, to flag potential undefined terms and supported plain-text references for which no matching heading paragraph is detected. Schedule identifiers must be numeric; Word field cross-references are not checked. Accept or reject each proposed redline; accepted changes land as native Word tracked changes. Nothing changes in your document until you accept a redline.
For a quick read of a single clause, such as an indemnity cap, an earnout or a non-compete, paste it into the free clause risk checker.
What LexDraft does not do: it does not give legal advice, perform due diligence, value the company, model tax outcomes or decide whether a securities exemption or antitrust filing applies. You check every output before the agreement is signed.
Frequently Asked Questions About Stock Purchase Agreements
What is a stock purchase agreement?
A stock purchase agreement is the contract under which a buyer buys shares of a corporation from its existing shareholders. It sets out which shares are sold, the price and how it is paid, the representations the sellers make about the company, the closing deliverables, indemnification if a representation turns out to be wrong, and restrictive covenants on the sellers.
What is the difference between a stock purchase and an asset purchase?
In a purchase of all the shares, the buyer takes over the whole company, including all of its liabilities, while its contracts and permits generally stay in place. In an asset purchase the buyer acquires the specified assets and generally assumes the agreed liabilities, but successor-liability rules and other applicable law can impose additional liabilities; transferred contracts may require assignment and consent. Tax results also differ, which is why structure is often negotiated first.
Who signs a stock purchase agreement?
The buyer and each selling shareholder sign it, because the shareholders own the shares being sold. The company itself often signs too, for its own representations and covenants. If some shareholders will not sign, the buyer may need a drag-along right in the shareholders' agreement or a different structure such as a merger.
Is a stock purchase agreement the same as a share purchase agreement?
They serve the same purpose. "Stock purchase agreement" is the usual US term, and "share purchase agreement" is the usual term in the UK and many other countries. The terms, warranties and legal rules differ by jurisdiction, so use a document written for the law that governs the deal.
Does a private sale of stock need to comply with securities laws?
Yes. Shares are securities, so even a private sale must be registered or fit an exemption under federal and state securities laws. Private resales are often made in reliance on exemptions such as Section 4(a)(1) or 4(a)(7) of the Securities Act. Counsel should confirm which exemption applies and whether any state filing is needed.
What is a Section 338(h)(10) election?
A Section 338(h)(10) election can treat a qualifying stock purchase by a corporation as a deemed asset sale and liquidation for federal income tax. Eligible targets include S corporations and corporations acquired from a selling consolidated group or qualifying selling affiliate. The purchasing corporation and the required seller parties must jointly elect; all shareholders of an S corporation target must consent, including any who do not sell. The target's asset basis is redetermined and may increase or decrease. Have tax advisers confirm eligibility and model the tax cost before agreeing to the election.
Can a buyer require sellers to sign a non-compete in a stock purchase?
Usually, if the restriction is reasonable and protects the goodwill the buyer is paying for. California allows a non-compete for a person who sells all of their ownership interest in a business under Business and Professions Code section 16601, even though it generally voids non-competes. Courts in Delaware and other states have refused to enforce sale-of-business non-competes that were broader than the business sold.
What happens to the company's contracts in a stock purchase?
They stay with the company, because the company does not change; only its owners do. Some contracts, such as leases, loans, licenses and key customer agreements, contain change-of-control clauses that require the other party's consent or let it terminate, so review them in due diligence and obtain consents before closing where needed.
Draft and review a stock purchase agreement in Word
Describe the deal, get a first draft in your document, then review it with tracked-change redlines. You stay in Word, and you decide what changes.
Install LexDraft for WordThis page is general information, not legal advice. LexDraft does not give legal advice; have qualified counsel check every stock purchase agreement against the law that governs it. Spotted something out of date? Email support@lexdraft.ai.