The integration of founding partners into the business after a Brazilian M&A transaction requires strategic attention and specific care to ensure a smooth transition and the preservation of the company’s interests — especially in cases of sale of control, where the founders will no longer have the same powers they used to have.
We highlight three critical points and the main legal aspects that must be considered in the Sale and Purchase Agreement (SPA) by the sellers in Brazilian negotiations to mitigate risks and align expectations between the parties involved, especially to manage these aspects.
1. Clear Definition of Roles and Responsibilities: The SPA must expressly provide for the roles and responsibilities of the founding partners in the new organizational structure. It is essential to specify your duties and limits of authority to avoid ambiguities that could lead to internal conflicts. Precisely define the governance structure, establishing a board, committees and procedures for decision-making is a must, thus ensuring that the roles of the founders are formally recognized and integrated into the new management.
2. Non-Competition, Confidentiality, and Integration Plan Clauses: It is important to insert provisions to ensure that founders do not compromise the new structure of the company or reveal confidential information. An integration plan that includes cultural and organizational alignment strategies (including training and development programs) can facilitate founders’ adaptation to the new corporate culture.
3. Incentives: Incentive packages, such as bonuses and equity shares, that reward the performance and ongoing contribution of founders can be brought forward in the SPA. These packages must be linked to specific goals and retention period to ensure alignment with the company’s strategic objectives.
For selling partners who will remain with the company after the transaction, it is essential that the Share Purchase Agreement (SPA) clearly defines the terms of their continued involvement. This ensures not only a smooth transition but also the legal and operational security needed to protect their interests and the value of the business they have built up to the M&A. A well-structured agreement reduces the risk of future disputes and contributes to the full realization of the transaction’s benefits.
