Heads of terms set out the main points you and the seller have agreed, such as the price, the structure and the timetable, before the lawyers draft the full sale agreement. They're mostly not legally binding, but a few clauses usually are, such as exclusivity and confidentiality.
What they usually cover
- the price, and how and when it's paid, including any deferred payments or earn-out
- whether it's a share or asset purchase. See Share purchase vs asset purchase: what's the difference?.
- key conditions, such as finance, due diligence or the seller staying on for a handover
- the timetable to completion
Exclusivity
An exclusivity clause stops the seller talking to other buyers for a set period while you complete due diligence and arrange finance. It's usually binding, and often lasts several weeks.
Lender offers come with their own terms
Separately, lenders issue indicative offers, or term sheets, setting out their own terms. In our process, those arrive alongside heads of terms, and we help you compare them. See How does applying for acquisition finance with bizbritain work?.
Why it matters for fees
Once a deal moves into the legal phase after heads of terms, a Stage 3 abort fee can apply if it then falls through. See What is the abort fee, and when does it apply?.
Get advice
Have your solicitor review heads of terms before you sign, especially the binding clauses.
Last reviewed: 8 October 2026