Project Hedz: Model heads of terms for UK M&A

What if there were model heads of terms for M&A transactions, particularly in a form suitable for mid-market, mid-stage tech exit-as-share-sales where so many deals are still negotiated up from first principles with adverse consequences as regards costs and those ubiquitous calls for efficiency? We at HLaw took on that challenge and have produced draft heads of terms aimed at M&A transactions that:

• • are share sales (i.e. sales of the Target company’s entire issued share capital) rather than asset sales (i.e. sales by that company of all or some of its business and undertaking with each asset individually transferred across);
  • involve a UK-incorporated Target company;
  • are ‘locked box’ deals rather than ‘completion accounts’ deals (those being the two principal mechanics for post-completion price adjustments);
  • have a buyer from ‘trade’ rather than private equity, the later typically having their own standard approach and heads of terms;
  • have a split exchange and completion to legislate for obtaining the consent of a regulatory, competition or tax authority (or other conditionality), as is often the case;
  • are not auction processes (in which the sellers will have multiple suitors and there may be no heads of terms at all);
  • do not have a guarantor for the Buyer, although one could fairly easily be introduced into the drafting should that be required; and
  • otherwise want to keep the drafting in the heads as simple as possible, with the drafting of detailed mechanics to be kept for the long form.