Whether you have engaged a corporate finance adviser to market your business for a sale or received an unsolicited offer, the Heads of Terms (“HoT”) sets out the fundamentals of their offer to you. They outline the consideration payable for the shares (or trade and assets), any expectations for key staff or seller to remain in the business, payment terms for deferred consideration and any exclusivity period for the offer, amongst other things.
While the HoTs are not legally binding, they do indicate a commitment from both sides. From this point onwards, both buyer and seller are acting in good faith, will start to incur significant professional fees, so getting the fundamentals right early is crucial. Once agreed, it can be difficult to deviate from key terms established in the HoTs, and therefore it is always worth considering taking professional advice on these to protect your position and minimise renegotiation through the process.
