Heads of terms: share purchases

by Practical Law Corporate

A standard document containing heads of terms for the proposed acquisition of the entire issued share capital of a private limited company under the law of England and Wales. This document is drafted from the buyer's perspective as a letter to the seller(s), outlining the principal commercial and legal terms of the potential share purchase. While generally non-binding, it provides a framework for negotiating a definitive share purchase agreement (SPA). Key provisions covered include the transaction structure, the purchase price and potential adjustment mechanisms and applicable conditions precedent, such as the completion of satisfactory due diligence. It also anticipates the inclusion of seller warranties, indemnities, and restrictive covenants in the future SPA. Notably, this standard document incorporates legally binding provisions important to the buyer, including an exclusivity or 'lock-out' provision, alongside clauses for confidentiality and governing law, offering protection while the parties negotiate the final deal.