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Heads of Agreement (HOA) / Heads of Terms (HOT) - Sale of Business


This Heads of Agreement (HOA) / Heads of Terms (HOT) is applicable in a sale and purchase of business situation. This represents the good faith intentions of the parties but also includes a deposit from the Buyer. This document is drafted in favour of the Buyer.

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Document Description

The document titled 'Heads of Agreement (HOA) / Heads of Terms (HOT) - Sale of Business' is a legally non-binding agreement that outlines the general terms and conditions of a proposed acquisition of a proportion% interest in a target business. The document is entered into by two parties, referred to as the 'buyer' and the 'seller'. The buyer is identified as party 1, with their principal place of business at party 1 address single line. The seller is identified as party 2, with their principal place of business at party 2 address single line.


The document begins by stating the purpose of the agreement, which is to set out the general terms and conditions of the proposed acquisition. It emphasizes that the detailed terms of the acquisition will be agreed upon based on the principles outlined in the agreement. The parties are committed to taking all necessary actions to successfully complete the proposed transaction.


The proposed transaction involves the buyer acquiring a proportion% interest in the target business, including all assets necessary for its operation. The specific assets to be acquired are listed, which may include the target's license(s) subject to any disclosed obligations and conditions imposed by a regulator. If applicable, the buyer will change the name of the target within six months following the completion of the transaction.


The purchase price and payment terms are outlined in detail. The aggregate consideration to be paid by the buyer is specified, including the currencygoodwill and other assets. The payment is subject to adjustments based on the net asset value of the target as determined through due diligence. The payment is divided into different stages, including a deposit to be paid before the initiation of due diligence, the signing of the sales and purchase agreement, and the completion of the transaction. The completion date is defined as the date of receipt of approval of the proposed transaction by the relevant regulator, if applicable.


During the transition period, which occurs between the execution of the agreement and the completion date or termination, the seller is obligated to cooperate with the buyer to ensure the continued operation of the target business. The current management of the target will remain in place, and the target will continue to use its current premises. The seller will also change the authorized signatories of the target's bank accounts as directed by the buyer.


The document includes provisions for due diligence, termination, closing conditions, fees, third-party approvals, confidentiality, dispute resolution, notices and service, and the absence of rights for third parties. It clarifies that the agreement is not legally binding and creates no legal obligations other than those specified under confidentiality, termination, deposit (if any), abort fee, and governing law. Each party is responsible for its own taxes, and the stamp duty for the proposed transaction is divided equally between the parties.


The agreement concludes with the signatures of the duly authorized representatives of the parties.

How to use this document?

To use the 'Heads of Agreement (HOA) / Heads of Terms (HOT) - Sale of Business' document, follow these steps:


1. Review the document: Familiarize yourself with the content and understand the purpose of the agreement.

2. Enter party information: Fill in the details of the buyer (party 1) and the seller (party 2), including their names and principal places of business.

3. Understand the proposed transaction: Read section 1 to grasp the nature of the proposed acquisition and the assets involved.

4. Determine the purchase price and payment terms: Refer to section 2 to ascertain the aggregate consideration and the payment stages. Take note of any adjustments based on the net asset value and the completion date.

5. Consider the transition period: Review section 3 to understand the obligations of the seller during the transition period. Note the requirements regarding management, premises, and bank accounts.

6. Plan for due diligence: If applicable, read section 4 to understand the timeline and requirements for completing due diligence. Ensure that the proposed transaction is subject to satisfactory due diligence.

7. Be aware of termination conditions: Familiarize yourself with section 5 to understand the circumstances under which the proposed transaction may terminate. Note any refundable deposit and the conditions for termination.

8. Understand closing conditions: Review section 6 to ensure that the specified conditions, such as valid licenses, compliance with laws, and accurate representations, are met before completion.

9. Consider fees: If applicable, refer to section 7 to understand the reimbursement of due diligence costs and expenses in the event of non-signing of the sales and purchase agreement.

10. Obtain third-party approvals: If necessary, read section 8 to identify any third-party consents or approvals required for the proposed transaction. Ensure that material consents or approvals are obtained before completion.

11. Maintain confidentiality: Understand the obligations outlined in section 9 regarding the confidentiality of information exchanged during the negotiation and implementation of the acquisition.

12. Resolve disputes: Familiarize yourself with the dispute resolution mechanism described in section 10. Note the jurisdiction clause and the process for serving notices.

13. Understand legal obligations: Acknowledge that the agreement is not legally binding except for the specified provisions. Completion of the proposed transaction requires the execution of definitive legally binding transaction documents.

14. Consider tax and stamp duty: Note the responsibilities of each party regarding taxes and stamp duty as outlined in section 14.


Please note that this guidance provides a general overview of the document and its steps. It is essential to consult legal professionals for specific advice and to ensure compliance with applicable laws and regulations.

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