A founder who knows which document comes next, who holds the pen, and which clauses bind can negotiate calmly. This page takes the documents in the order you will meet them. For the wider process, see how to sell a company in Singapore. For how the price itself can be shaped, see M&A deal structures explained.
The summary table
| # | Document | Stage | Usually drafted by | Legally binding? |
|---|---|---|---|---|
| 1 | Engagement letter | Before launch | Seller’s adviser | Yes |
| 2 | Non-disclosure agreement (NDA) | Before any confidential information | Seller’s adviser or lawyer | Yes |
| 3 | Teaser | Marketing | Seller’s adviser | No |
| 4 | Information memorandum | Marketing | Seller’s adviser, with the founder | No (but see disclaimers) |
| 5 | Process letter | Marketing | Seller’s adviser | Generally no |
| 6 | Indicative offer (IOI) | First round bids | Buyer | No, usually |
| 7 | Letter of intent or term sheet | Selecting a buyer | Buyer, negotiated | Mostly no; some clauses yes |
| 8 | Data room index | Due diligence | Seller’s adviser | No |
| 9 | Due diligence request list and Q&A log | Due diligence | Buyer (requests); seller (answers) | No, but answers can feed into warranties |
| 10 | Sale and purchase agreement (SPA) | Signing | Buyer’s lawyer, usually | Yes |
| 11 | Disclosure letter | Signing | Seller’s lawyer | Yes, as part of the SPA package |
| 12 | Ancillary agreements | Signing or completion | Mixed | Yes |
| 13 | Completion deliverables | Completion | Both lawyers | Yes |
| 14 | Post-completion filings | After completion | Company secretary, buyer | Statutory duties |
The “usually drafted by” column reflects common practice in our experience, not a rule.
1. Engagement letter
What it is. The contract with your M&A adviser: scope, fee (in our experience a retainer, a success fee or both), duration, and what happens if you sell during or after the mandate.
Who drafts it. The adviser.
What to watch for. In our view the key clauses are the definition of “transaction” (does a partial sale or fundraise trigger a fee?), the tail period (how long after termination the adviser still earns on buyers it introduced), and exclusivity. Ask whether there is a prior adviser or broker with a live claim on any buyer before you sign. See choosing an M&A adviser.
2. Non-disclosure agreement (NDA)
What it is. A buyer’s promise (also called a confidentiality agreement) to keep your information confidential and use it only to evaluate the deal.
Who drafts it. Usually the seller’s side, so the protections start in your favour.
What to watch for. Duration; a non-solicitation clause protecting your staff and customers; return or destruction of information if talks end; and whether the buyer’s advisers and financiers are bound.
There is a Singapore-specific reason to get this right. The Personal Data Protection Act allows personal data to be shared without consent for a prospective “business asset transaction”, which covers both business or asset sales and sales of an interest in a company. The statute labels the buyer X, the seller Y and, in a share sale, the company sold Z.
- Business or asset sale (para 1). X may collect, and Y may disclose, “only personal data that is necessary for X to determine whether to proceed”, and “X and Y must have entered into an agreement that requires X to use or disclose the personal data solely for purposes related to the business asset transaction” (PDPA, First Schedule, Part 4, para 1(3)). If the deal does not proceed, “X must destroy, or return to Y, all personal data collected” (para 1(5)).
- Share sale (para 2). The same two conditions apply, with the agreement made between X and the seller or the company (para 2(2)). If the deal does not proceed, X must destroy or return the data, and so must the seller for anything it collected from the company (para 2(4)).
A well-drafted NDA supplies the agreement the statute requires.
3. Teaser
What it is. A one or two page anonymous summary of the business and why it is attractive.
Who drafts it. The seller’s adviser, approved by you.
What to watch for. Anonymity. In our experience, a distinctive product plus a founding year can identify a small company in one search.
4. Information memorandum
What it is. The full sales document (also called a CIM), sent only after an NDA is signed: history, customers, team, operations, financials and the investment case.
Who drafts it. The seller’s adviser, from information the founder provides.
What to watch for. Every number must tie to your records; label forecasts as forecasts. In our view, an information memorandum that oversells does not raise the price; it raises the price the buyer later tries to take back.
5. Process letter
What it is. The rules of the sale process: the offer deadline, what each offer must contain (price, structure, funding, conditions, timetable), and who to contact.
Who drafts it. The seller’s adviser.
What to watch for. It is your tool: when every buyer answers the same questions, offers compare line by line.
6. Indicative offer (IOI)
What it is. A first, non-binding offer (an indication of interest): a price or range, a proposed structure, key assumptions and the diligence still needed.
Who drafts it. The buyer.
What to watch for. The assumptions. A price “on a cash-free, debt-free basis assuming a normal level of working capital” can move a long way once “normal” is defined. Note how much is paid at completion and what conditions are listed.
7. Letter of intent or term sheet
What it is. The document that picks one buyer and records the main terms before the expensive legal work starts. Also called heads of terms or a memorandum of understanding.
Who drafts it. Usually the buyer, then negotiated.
Binding and non-binding parts. Price, structure and deal terms are typically stated to be non-binding. A few clauses usually bind from signature: confidentiality, exclusivity, costs and governing law.
Exclusivity. This is the big one. Exclusivity (or “no-shop”) means you stop talking to other buyers for a fixed period while this buyer completes diligence. In our view, this is the moment of greatest seller leverage, and it ends when you sign. Keep it short, tie extensions to progress, and fix the important terms (price mechanism, deferred amounts, key conditions) in the letter rather than “to be agreed”.
8. Data room index
What it is. The table of contents of the virtual data room, the secure online folder of documents for diligence.
Who drafts it. The seller’s adviser, often mirroring the buyer’s request list.
What to watch for. Version control and completeness. The index frequently becomes a schedule to the sale agreement, so whatever is in the data room may count as “disclosed”. Our due diligence checklist for Singapore SMEs lists what buyers typically request.
9. Due diligence request list and Q&A log
What it is. The buyer’s list of documents and questions, and the running log of every answer given.
Who drafts it. The buyer and its advisers write the questions; the seller answers, ideally through its adviser.
What to watch for. Answers are written evidence. In our experience, buyers’ lawyers mine the Q&A log when drafting warranties, and a cluster of questions on one weakness is often groundwork for a lower price. Answer from documents, not memory.
10. Sale and purchase agreement (SPA)
What it is. The binding contract for the sale (a share purchase agreement, or an asset or business purchase agreement).
Who drafts it. Usually the buyer’s lawyer, though in a competitive auction the seller’s lawyer may issue the first draft for bidders to mark up.
These are the sections a founder should read personally:
Price mechanics. How the headline becomes your cash: adjustments for cash, debt and working capital (locked box or completion accounts), deferred payments, earn-outs and escrow. See deal structures and earn-outs explained.
Representations and warranties. Statements of fact you promise are true, for example that the accounts are accurate, taxes are paid and there are no undisclosed disputes. If one proves untrue, the buyer can claim its loss. A representation can also carry remedies for misrepresentation, in some cases including rescission (unwinding the contract), which is why, in our experience, sellers usually give warranties only.
Indemnities. A promise to reimburse the buyer dollar for dollar for a specific risk, such as a known tax exposure or a pending claim, whether or not a warranty was breached. In our experience a tax covenant (or tax indemnity) is the exception: it is usually general, covering pre-completion tax whether known or not. Negotiate indemnity scope tightly.
Limitations. The guardrails on your liability: an overall cap (in our experience often set as a percentage of the price), a minimum claim size, time limits for bringing claims, and exclusions for matters you disclosed. In our view these clauses are worth as much as the price, because they decide how much of it you keep.
Conditions precedent. Things that must happen between signing and completion, such as landlord, customer or regulatory consents. Each is a reason the deal might not close.
11. Disclosure letter
What it is. The seller’s letter listing exceptions to the warranties. If a warranty says “there are no disputes” and there is one, you disclose it here, and the buyer generally cannot later claim for it.
Who drafts it. The seller’s lawyer, with heavy input from the founder.
What to watch for. Disclose specifically and fairly; buyers often resist general disclosure of “everything in the data room”. In our experience, the hours spent on the disclosure letter are the best-value hours of the whole sale for a founder.
12. Ancillary documents
These sit alongside the SPA and are signed at signing or completion.
- Transitional services agreement (TSA). If the seller keeps providing services for a period (IT, accounting, a shared warehouse), the TSA sets scope, price and end date.
- Non-compete and non-solicit undertakings. The seller agrees not to compete with the business, or poach its staff or customers, for a period and in a territory. Keep the scope reasonable and specific.
- Employment or consultancy agreements. If you are staying on: role, pay, reporting line and how you can leave. These must fit any earn-out that depends on your performance.
- Shareholders’ agreement. If you keep or receive shares (rollover equity), the agreement that governs your rights as a minority owner, including how and when you can sell.
- Employee notifications in a business sale. Where an undertaking is transferred, section 18A of the Employment Act preserves employment contracts with the buyer, and the seller “must notify the affected employees and the trade union of affected employees (if any)” before the transfer. The Ministry of Manpower lists “Transfer of shares.” among the cases that are not transfers for this purpose. In our reading, that is because in a share sale the employer, the company itself, does not change.
13. Completion deliverables
What it is. The documents exchanged on completion day, when ownership passes and money moves: share transfer forms, board resolutions, director changes, updated registers, bank mandate changes, consents, and the funds flow memorandum showing who pays what to whom.
Who drafts it. Both lawyers, working from a completion agenda usually prepared by the buyer’s lawyer.
What to watch for. Read the funds flow memorandum line by line: it turns the headline into your net cheque after debt repayment, escrow, fees and adjustments.
“The day-1 cheque is the number. Everything else is a negotiation you haven’t started.”
Gwee Yi Chen, Growth Alliance Capital
14. Singapore post-completion filings
For a share sale of a Singapore private company, three sets of filings typically follow.
ACRA share transfer. ACRA requires companies to “file a transfer of shares within 14 days to notify ACRA”. For a private company, “share transfers only take effect once ACRA’s EROM is updated upon filing. You cannot backdate the transfer date.”
ACRA officer changes. Director and officer changes must be reported “via Bizfile within 14 days to avoid penalties”.
Register of registrable controllers. A registrable controller is, broadly, anyone with “Interest in more than 25% of the shares” or voting power, or significant control (ACRA). A change of owner usually changes who the controllers are. ACRA requires the private register to be updated within seven days, and says “This deadline starts after your controller informs you of a change”; the update must then be filed with ACRA’s Central RORC within two business days.
Stamp duty on the share transfer. IRAS charges stamp duty on a share transfer at “0.2% of the purchase price or the value of the shares transferred”, payable “on the actual price or value of the shares, whichever is higher”. IRAS lists the buyer as the party to pay by default, though the terms of the document govern. The document should be stamped within 14 days after signing in Singapore, or within 30 days after receiving it in Singapore if signed overseas.
Personal data. Where personal data was disclosed under the PDPA exception, the people concerned must be told that the deal has happened and their data was disclosed to the buyer. The duty is not the buyer’s alone. In a business or asset sale, “X or Y must notify the applicable individuals of Y whose personal data is disclosed” (PDPA, First Schedule, Part 4, para 1(4)(c)). In a share sale, “X, Y or Z must notify the applicable individuals of Z whose personal data is disclosed” (para 2(3)(c)). In our view, the SPA or completion agenda should say which party sends it.
Asset sales differ; see how to sell a company in Singapore. None of this page is legal or tax advice; your lawyer and tax adviser should confirm what applies to your deal.
Key takeaways
- Only a handful of documents bind you: the engagement letter, NDA, the binding clauses of the letter of intent, the SPA package and the ancillaries. Read those personally.
- Exclusivity in the letter of intent is where seller leverage peaks. Fix the important terms before you grant it.
- The Q&A log and data room are evidence. Answer from documents, and expect answers to reappear in the warranties.
- Warranties, indemnities and limitations decide how much of the price you keep; the disclosure letter is your main protection.
- Read the funds flow memorandum: it turns the headline into your actual cheque.
- In Singapore, the share transfer must be filed with ACRA within 14 days and, for a private company, only takes effect when ACRA’s register of members is updated; stamp duty of 0.2% applies on the higher of price or value.