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Heads of Agreement Template (Free)

Heads of Agreement Template (Free)

When a buyer has genuine intent to purchase a business, a Heads of Agreement will be used to make a conditional offer to a seller and open up the real negotiations.

What is a Heads of Agreement?

A Heads of Agreement is usually a non-binding document outlining proposed, price, terms and special conditions for the sale of a business, pending the seller providing all the necessary information and documentation to the buyers satisfaction.

When to use a Heads of Agreement?

A Heads of Agreement comes into play when a buyer is serious about purchasing a business, and wants to formally present a conditional offer to the seller. 

A Heads of Agreement is used to clarify the understanding between both parties and contains the preliminary conditions to be included in the legally binding Contract of Sale.

The buyer would usually pay a small holding deposit to the Business Broker or their solicitor to hold in trust (refundable if the sale does not proceed) to confirm their intentions.

Once both parties agree to the preliminary conditions of sale and seller accepts the offer, the business would be considered “Under Offer” and off the market for now. The buyer then has a period of time, usually 7-14 days to conduct formal due diligence and completely assess the business.

While the buyer is conducting due diligence, the seller is excluded from accepting any other offers from new buyers. In the background, the Business Broker or solicitor of the seller will begin the process of formalising clauses for the conditions of sale and drafting the Contract of Sale ready for both parties to sign and move to the next step in the sales process.

After, the Contract of Sale is signed, the business would be considered “Under Contract”.

Get the Template.

Download our easy to use Heads of Agreement Template in Microsoft Word format which can be easily customised to suit your needs (Australian Version).

Consult a Professional.

Always consult a qualified professional for advice.

By Peter Kais | hospitalitytrader.com