Subscription Agreement

A formal agreement between a buyer and seller in an M&A transaction where shares in a company are being acquired. They generally detail the terms of the acquisition, including the price to be paid per share and the number of shares being purchased. They may also highlight details on matters such as confidentiality. In some cases, they may identify an anticipated rate of return for the buyer.

These agreements typically get used by startups and small businesses. They offer an opportunity to raise capital without finding a venture capital investor or taking their company public. They are governed by SEC Rule 506(b) and 506(c) of Regulation D.