Heads Of Terms (Share Sales)

These Heads Of Terms (Share Sales) (also known as heads of agreement) can be used where a buyer and seller have agreed the principal terms of a share sale and want to record them in writing. This can help avoid misunderstandings, identify issues at an early stage and reduce wasted time and costs.

Heads of terms are typically not legally binding, although it is common for certain provisions (such as confidentiality) to be an exception. These Heads Of Terms (Share Sales) are a fairly standard set of terms for a share sale.

What does Heads Of Terms (Share Sales) do?

It sets out the key commercial terms agreed in principle and provides a framework for negotiating the final share sale agreement and related documentation.

What does Heads Of Terms (Share Sales) cover?

• Outline price and payment terms.
• Warranties and their qualifications.
• Post-completion non-solicitation and non-competition restrictions.
• Release of the seller (or sellers) from guarantees.
• An anticipated completion date.
• Provisions stated to be legally binding, including confidentiality, responsibility for costs and the due diligence procedure.

When should you use Heads Of Terms (Share Sales)?

• The parties have agreed the main terms in principle and want to record them before the full share sale agreement is negotiated.
• You want to set expectations on deal structure and timetable, including due diligence and an anticipated completion date.
• You want certain pre-contract obligations to be legally binding, such as confidentiality and responsibility for costs.

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