Valuation and structuring
What is included in the Heads of Terms?
The Heads of Terms document (Heads) is also referred to as a Letter of Intent (LOI) document
This is the document which outlines the key terms of the deal before moving to a legal/contractual position as defined in the Sale & Purchase Agreement (SPA) drawn up by the buyer’s lawyers.
The Heads document is presented by the buyer to the seller via their advisers and contains a number of key areas around the deal. Essentially, the more comprehensive, the better on the basis that this will form the key content of the SPA in due course. Details to cover need to include the following key aspects:
- the total price offered for the business;
- the percentage of shares being acqu