M&A Purchase Agreement | A Complete Guide

1. Introduction

Over the past decade, the global iGaming sector has evolved from a niche curiosity into a mainstream entertainment vertical with annual gross gaming revenue well above US $100 billion. Expansion into North America, the rise of omnichannel sportsbooks and the relentless consolidation of affiliate-marketing networks have pushed transaction volumes to record highs; 2024 alone logged more than 140 announced iGaming M&A deals, a 33 % jump on the prior year.

Against this backdrop, the Definitive (or “M&A”) Purchase Agreement (DPA) is the document that ultimately decides whether value is captured or destroyed. Every schedule, warranty and closing condition must be precise enough to survive forensic scrutiny from regulators such as the Malta Gaming Authority (MGA), the UK Gambling Commission (UKGC) or (in the United States) a patchwork of state-level gaming control boards. In short, the DPA turns the broad commercial handshake of the Letter of Intent (LOI) into a legally enforceable transfer of risk, reward and—most importantly—licences.

2. Why the DPA Matters in iGaming Deals

Unlike traditional bricks-and-mortar businesses, iGaming operators hold licences that are personal to the licensed entity, its “controlling beneficiaries” and its key certified staff. A change of control, even indirect, can invalidate a licence unless the purchaser receives prior regulatory approval. Failure to calibrate the DPA to these realities can lead to a post-closing enforcement action or, worse, a suspension of operations.

The stakes are magnified by the sector’s unique asset mix: proprietary game engines, live-dealer studios, player-data warehouses and “skin” agreements with third-party platforms. Each of these assets must be scheduled, valued and—as needed—excluded from the perimeter of the sale. Contemporary DPAs often run 80-120 pages before schedules, reflecting this complexity.

3. Transaction Structures: Stock vs. Asset Deals in iGaming

Most iGaming transactions slot into one of two legal wrappers, each carrying different regulatory and tax outcomes:

• Stock Purchase Agreement (SPA). The buyer acquires the shares (or membership interests) of the licensed entity. Advantages include licence continuity and contract portability; disadvantages can include hidden liabilities and mandatory change-in-control filings in multiple jurisdictions.

• Asset Purchase Agreement (APA). The buyer cherry-picks assets (domains, databases, code, player files) and leaves the legacy entity behind. This can ring-fence historical compliance risk but often triggers re-licensing, transfer-pricing reviews and a need for novating key supplier contracts.

Earn-outs—where a portion of the price is paid only if the asset hits post-closing KPIs—are especially prevalent in gaming because player deposits, churn patterns and bonus costs fluctuate materially with each regulatory or tax change. Recent market statistics show that 72 % of gaming deals above US $50 million included an earn-out in 2024, often spanning two full calendar years.

4. The Journey from LOI to Closing

1. LOI execution. Typically non-binding on price but binding on exclusivity and confidentiality.

2. Regulatory & commercial due diligence. Deeper than in most sectors: suitability checks on proposed shareholders, source-of-funds tracing, game-RTP verification, segregation of player funds, AML controls and penetration testing of the RNG or sportsbook feed.

3. Drafting and negotiating the DPA. Parallel tracks run: commercial points (price, earn-out metrics) and legal points (representations, warranties, covenants). Negotiation cycles average five–eight weeks in cross-border deals.

4. Pre-closing covenants and approvals. Filings with the target’s licensing authorities, antitrust bodies and occasionally stock exchanges.

5. Closing mechanics. In regulated jurisdictions the DPA is often signed subject to regulatory approval, with closing postponed until the licence authority issues its consent. In unregulated “dot-com” markets, signing and closing can coincide via a virtual closing room.

These phases can compress to 45 days for small affiliate website buys, or expand past nine months for multi-jurisdiction B2C operators with land-based sports-bar partnerships.

5. Anatomy of an iGaming DPA

Although every deal is bespoke, modern DPAs converge around a set of core sections:

Definitions. Clear definitions separate “Closing” (cash movement and possession) from “Completion” (regulator sign-off).

Purchase price and adjustments. Often broken into: (i) headline price, (ii) working-capital true-up, (iii) rolling inventory of active players, (iv) earn-out. For B2C sportsbooks, a separate adjustment tied to “Net Gaming Revenue (NGR) in transition markets” is common.

Representations & warranties (R&Ws). In the gaming vertical, buyers insist on sweeps covering licence validity, player fund segregation, responsible-gaming compliance and the integrity of random-number generators. The rise of representation & warranty insurance (RWI) has shifted debate from scope to retention and survival; the 2025 RWI market shows premiums averaging 3.2 % of enterprise value in European deals.

Covenants. Interim covenants forbid the seller from altering bonus policies, changing odds algorithms or launching new jurisdictions without buyer consent.

Closing deliverables. Escrow releases, release of licence bonds, and—where required—a Share Pledge Agreement holding stock in trust until any vendor note is repaid.

Indemnities and remedies. Gaming deals frequently include a “bad actor” indemnity whereby any post-closing penalty for pre-closing AML or match-fixing breaches remains the seller’s responsibility.

6. Supporting Documents at a Glance

Table 1 – Core supporting documents and their applicability

7. Sector-Specific Nuances

Licence Portability. The MGA allows a fast-track share-transfer approval if acquirer principals are already vetted, whereas the UKGC treats any 10 %+ shareholder change as a “key event” requiring pre-closing clearance. California’s Tribal-Class III compacts, by contrast, prohibit stock deals altogether, forcing asset sales structured as revenue-share joint ventures.

Technology escrow. Because games are delivered via cloud-based content aggregation platforms, buyers demand an escrow of source code in the event the seller’s dev team resigns post-closing.

Data-protection. GDPR and emerging US state privacy laws create additional warranties around player-data consents and the right-to-be-forgotten workflow.

Advertising restrictions. Several EU member states now cap bonusing and limit TV spots after 21:00. DPAs therefore include covenants permitting a purchase-price claw-back if new legislation slashes player LTV in a material market within 12 months of closing.

Affiliate traffic quality. For acquisition of affiliate networks, evergreen payment obligations can balloon if legacy traffic decays. Modern DPAs reference Google Search Console and tracking-software metrics to benchmark performance over a six-month observation window before earn-out metrics are finalised.

8. Pros and Cons of Using a Comprehensive DPA

Pros

• Provides a single, enforceable source of truth, reducing litigation risk and satisfying regulator expectations for “full-form” agreements.

• Facilitates representation & warranty insurance by aligning policy definitions with legal language.

• Enables post-closing integration by clearly mapping the perimeter of assets—critical when migrating player accounts to a unified wallet.

Cons

• Drafting costs can exceed US $250 000 in multi-jurisdiction deals, with outside counsel and regulatory specialists billing in parallel.

• Heavily negotiated R&Ws can delay signing, extending the window for market shocks or third-party bids.

• Excessive specificity can age poorly; a DPA frozen in time may fail to anticipate swift regulatory changes in emerging markets such as Brazil or Peru.

9. Frequently Asked Questions

Q1. Can we sign and close on the same day?
Only if all licensing authorities have pre-vetted the buyer and issued “no-objection” letters. In most regulated markets, expect at least a 45-day cooling-off period between signing and closing.

Q2. How is an earn-out measured when player behaviour is volatile?

Earn-outs typically reference audited Net Gaming Revenue or EBITDA, normalised for extraordinary regulatory costs. A dispute-resolution accountant (or “Independent Expert”) is appointed in the DPA to arbitrate gray areas.

Q3. Should we buy assets to avoid inheriting historical AML breaches?

An asset deal can wall-off legacy liabilities, but you may still need to seek fresh licences, renegotiate PSP contracts and re-onboard every player under new T&Cs. The cost and time often outweigh the perceived risk-reduction.

Q4. Do we really need R&W insurance on a sub-US $50 million transaction?

Premiums have fallen enough that policies are now common even in the US $20–40 million band. An insured deal can streamline negotiations by lowering the seller’s indemnity cap and replacing escrow with an insurance policy.

Q5. What happens to player balances at closing?

Most regulators require funds to remain in a segregated account. The DPA should state whether the balance is included in working capital or refunded to the seller. Buyers often demand a true-up if actual balances differ by more than ±5 % between signing and closing.

10. Conclusion

A well-constructed Definitive Purchase Agreement is more than a legal formality; it is the operating manual for transferring highly regulated, tech-intensive iGaming businesses. By aligning commercial intent with regulatory reality, the DPA protects enterprise value from signature to integration—no matter how turbulent the market becomes.

Disclaimer: This guide is informational and does not constitute legal advice. Always engage qualified counsel licensed in the relevant jurisdictions before entering into any transaction.