Heads of terms by which the parties outline their intention to buy and sell the business and assets of a private limited company.

Heads of terms can help to avoid misunderstandings and provide a useful map of the steps to be taken on the way to signing the formal agreement. 

It sets out the main elements of a transaction and are generally signed near the beginning of the deal, once preliminary terms have been agreed, and before commencing detailed due diligence and the drafting of the definitive agreements. They are not normally intended to create a legally binding contract (save for in respect of certain specific provisions).

There is no standard format for heads of terms. They can vary from a simple letter to a carefully drafted deed prepared by advisers.